Key Points

• Super Micro Computer stock fell by over 20% after the company’s latest quarterly earnings release on Aug. 5.

• The artificial intelligence (AI) data center builder’s shares have found support, but this could be temporary.

• As three key issues with Supermicro persist, shares could keep on sinking.

• 10 stocks we like better than Super Micro Computer ›

On Aug. 5, 2025, Super Micro Computer (NASDAQ: SMCI) released results for the company's fiscal fourth quarter, ending June 30, 2025. The artificial intelligence (AI) server maker's shares fell by over 20% on disappointing results and guidance.

Since then, the stock has started to retreat. However, perhaps the dust hasn't settled, and this could instead be the calm before the storm.

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Three issues persist, all of which could continue to impact Supermicro's growth, profitability, and the value of its shares: falling market share, squeezed margins, and the threat of losing key customers.

Image source: Getty Images.

Why SMCI stock tanked after earnings

On both revenue and earnings, Supermicro's Q4 FY2025 results fell short of analysts' expectations:

Data source: Super Micro Computer.

On a year-over-year basis, Supermicro's Q4 revenue increased by only 7.5%, a far slower pace than in prior quarters. Even worse, the company's adjusted EPS fell by 24% year over year, a wider-than-expected decline.

CEO Charles Liang may have blamed the revenue miss on delayed revenue recognition and the earnings miss on recent tariff hikes. Still, I believe the market took these disappointing results as a sign that the competition continues to get the better of Supermicro.

Alongside disappointing quarterly results, the company also released disappointing updates to guidance. Full-year revenue guidance of $33 billion, or 50% above reported FY2025 revenue, may sound impressive, but previously, the company was guiding for $40 billion in revenue for the fiscal year ending June 30, 2026.

Furthermore, with Q1 FY2026 guidance calling for between $6 billion and $7 billion in revenue, it's questionable whether Supermicro can even hit its walked-back revenue target for the full year.

While the company's quarterly results fell short, its annual revenue came in ahead of expectations, growing by 47% over the prior fiscal year. Still, given the latest slowdown and decline in revenue and profitability, I'm skeptical that a rebound is just a few quarters away.

Supermicro's growth, profitability, and stock price remain under threat

Trading for around 25 times annual earnings, Supermicro trades at a premium to direct competitors like Dell Technologies (NYSE: DELL) and Hewlett Packard Enterprise (NYSE: HPE). Dell and HPE both currently trade for 20 times earnings.

In the past, Supermicro's valuation premium made sense. After all, this company was an early mover, capitalizing on its strong ties with Nvidia (NASDAQ: NVDA) to quickly bring out cutting-edge AI server products. However, since then, competitors have gained a greater edge.

In turn, this has led to a sharp decline in market share, a trend that is one of three reasons why I'm cautious about Supermicro stock right now. Between 2022 and 2024, the company's share of the AI server market fell from at least 80% to between 40% and 50%.

Further declines may lie ahead. Last month, analysts at Bank of America (BofA) argued that rivals Dell and HPE are better positioned to win new business from enterprise clients. This makes sense, given their existing relationships with such clients.

Additional market share losses could result in a further slowdown in sales growth, but that's not all. High competition could also place further pressure on margins, the second reason I'm concerned about this stock. In recent years, Supermicro's gross margins have shrunk from 18% to 9.5%.

An additional squeeze is possible. Back in June, analysts at KeyBanc argued that a lack of product differentiation points to Supermicro having to compete on price to sustain higher growth. The impact of this on margins could counter the positive impact of a sales resurgence.

To top it all off, there's another long-standing risk with Supermicro that also makes me concerned about future performance: the risk of losing major customers. Reportedly, key customers like CoreWeave and X.ai have started placing AI server orders with Dell. If these customers fully switch over to a competitor for their AI server needs, this could materially affect Supermicro's future revenue and earnings.

Bottom line: I'm sticking to the sidelines

If the aforementioned issues lead to an additional growth slowdown and/or drop in profitability, the impact on the price of Supermicro shares could be significant.

Over the past 12 months, this stock has traded for as low as $17.25 per share. Supermicro could retrace this past low if quarterly results continue to disappoint, management keeps walking back expectations, and SMCI's valuation premium to Dell and HPE continues to erode.

Given these risks, I'm waiting things out -- at least until subsequent developments emerge that help to assuage my concerns.

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• CEO John Stankey is reshaping AT&T to be leaner and more nimble like Verizon and T-Mobile.
• The 140-year-old telecom company's transition shows signs of paying off, with its stock outpacing rivals so far this year.
• To accomplish this, Stankey has shown himself willing to make big bets. So far, Wall Street seems to approve.

AT&T is facing a once-in-a-century challenge, and CEO John Stankey is pushing the company to "disrupt itself" and go hardcore to meet the moment.

The telecom's sprawling network of copper wires is no longer suited to 21st-century demands for speed and mobility, demands that increasingly require new infrastructure of fiber optic networks and wireless spectrum.

Stankey, who took the helm as CEO in July 2020, knows this. He's shown himself willing to do something about it — even if that means a sharp departure from the legacy company's past to prepare for the future.

As the company moves to sunset most of its copper network in the US by the end of 2029, Stankey has also instituted a broad cultural shift internally. He's moved away from prioritizing 20th-century corporate values like loyalty and tenure in favor of a tech-style, "more market-based culture," the AT&T CEO wrote in a sweeping memo last week that was first reported by Business Insider.

It's a strategy that is showing signs of paying off, with many Wall Street analysts recently boosting their price targets for the stock. AT&T shares are up 22% this year compared to 8.25% for T-Mobile and 6.7% for Verizon.

"They refocused on fundamentals, and the fundamentals are just getting better," BNP Paribas telecom analyst Sam McHugh told Business Insider. "Investors really like that simple strategy. It gives a very clear message — it's delivering financially."

It's a transition that Stankey says is vital to the company's future — and will take time to accomplish.

"We are midstream on a multi-year journey to build the company we want, not simply optimize the one we have," the CEO wrote in his memo.

"I tried to pick my brain for an example of another 100+ year old company that didn't have to disrupt itself to secure sustainable relevance. I am still searching for the first example," he added. "I suspect our willingness to disrupt ourselves is the under-pinning of why this company approaches 150 years of relevance."

AT&T's bid for continued relevance has meant the building of large and growing wireless and fiber optic networks as it looks to fend off increasing competition from Verizon, T-Mobile, and a host of smaller operators.

The company has managed to keep pace with its top competitors in terms of mobile phone accounts as it ramps up an aggressive fiber optic expansion that Stankey says will lead to further mobile signups from customers looking to bundle services.

AT&T beat expectations for its second quarter earnings, released in July, on the back of strong wireless and fiber subscriber growth and a multi-year estimated tax benefit of up to $8 billion from the One Big Beautiful Bill Act.

It could face a more challenging second half of the year.

The company said that some of the second quarter's lift came from new customers pulling orders forward to avoid tariff-related price hikes, and that it was cautiously anticipating higher rates of customer churn in the latter half of the year.

"We are assuming that we're going to continue to have a competitive environment," AT&T CFO Pascal Desroches told analysts.

Another area that Stankey is reshaping is AT&T's workforce.

Without such a massive legacy copper network to support, most of AT&T's competitors have managed to grow with a comparatively smaller head count.

AT&T now has roughly 141,000 employees, and the company has taken several rounds of reductions in recent years to align its workforce more with its peers. Verizon has 99,000 and T-Mobile has 70,000, and Verizon also gave buyouts last year to some 4,800 workers.

The increasingly strict return-to-office mandate that AT&T has rolled out in phases over the past year has also resulted in further reductions, multiple employees have told Business Insider, and Stankey signaled in his memo that he's fine with more people leaving if they're not on board with the company's new direction.

"If a self-directed, virtual, or hybrid work schedule is essential for you to manage your career aspirations and life challenges, you will have a difficult time aligning your priorities with those of the company and the culture we aim to establish," he said in the memo.

Stankey has taken a similar my-way-or-the-highway approach in the past.

He was the company's chief operating officer who drove the acquisition of Warner Media and reportedly led the division with a high-handedness that ruffled the entertainment executives. The move was part of a larger trend of network services providers seeking to own content producers, and Stankey (as CEO) shrugged off setbacks as he pursued a vision of expanding HBO to rival Netflix and Amazon Prime.

AT&T jettisoned Warner Media in 2022 at a loss of over $40 billion, and finalized its exit from the media business earlier this year when it sold its remaining stake in DirecTV to private equity firm TPG at a steep discount.

While Stankey's apparent appetite for taking big bets seems unchanged, the circumstances around this chapter in the company's history are potentially more favorable.

"I'm sure there's a book to be written one day of how you can turn around your profile among investors," said McHugh, the BNP Paribas telecom analyst, who said many long-term investors previously dismissed the company for its poor execution and misallocation of capital into non-core assets, like the media deals Stankey led.

"I covered European telcos for a long time. Basically, the stocks that do best in the sector are the ones who have a simple story and just focus on their core competencies," he added. "By luck or by good judgment, I think they're now on the right track."

In his memo, Stankey said the workplace and technological shifts were essential for AT&T to succeed in the market, citing US Army General Eric Shinseki as saying, "If you dislike change, you're going to dislike irrelevance even more."

• Palmer Luckey teased the idea of Auduril manufacturing American-made computers.
• Luckey joined the Reindustrialize Summit in Detroit virtually.
• The Anduril founder also emphasized the importance of working with partners to build tools.

Palmer Luckey, the founder of Anduril, the defense tech giant that makes weapons and military products, announced that it could produce American-made computers at the Reindustrialize Summit, a conference about modernizing American manufacturing, in Detroit on Thursday.

"This is one of those things where I started talking to companies years ago about this," Luckey said. "I think there's a chance that it's going to be Anduril."

Luckey added that Anduril has held conversations with "everyone you would need to have to do that," including people "on the chip side, on the assembly side, on the manufacturing side."

Anduril doesn't yet make computers, and Luckey isn't completely sold on the effort. He told the crowd: "There are some things Anduril has to do," he said. "There are other things we'd rather have other people do. This is something I'd rather have other people do."

American-made computers aren't a novel concept. PC-maker Dell had several manufacturing plants throughout the US, but in 2009, it closed its North Carolina plant and announced a change to its international manufacturing partner, moving from Ireland to Poland.

Luckey, who addressed the crowd virtually and with a humanoid robot from Foundation, also added that Anduril will not build its own humanoid robot: "We're going to partner with other companies where it makes sense," he said.

Anduril, which was cofounded by Luckey in 2017, makes hardware for the US military, including drones and underwater submersibles, and an AI-powered software platform, Lattice. The company is also working on extended reality headsets and other wearables for the military in a partnership with Meta, which the companies announced in May.

Luckey declined to share what he would name the computer if he were to make it, but hinted that "it's pro-American, and also a gambling reference, but I'll leave it at that."