AI Server Demand Soars, Doubling Revenue... Profitability in 'Red Alert'

Super Micro Computer, Inc. (SMCI) reported provisional results for its fiscal 2026 second quarter, showing revenue jumping from $5.7 billion a year earlier to $12.7 billion, while GAAP gross margin fell sharply from 11.8% to 6.3%. Net income rose to $401 million, but operating cash flow turned negative due to working-capital build. The company set a minimum revenue target of $12.3 billion for Q3 and at least $40 billion for the full fiscal year 2026. In addition, part of lead independent director Tally C. Liu’s restricted stock units vested and converted to common shares, and Chief Accounting Officer Kenneth Cheung received a new grant of 4,500 RSUs, with full board and executive equity compensation details disclosed.

Recently, SMCI secured a $2 billion revolving credit facility arranged by J.P. Morgan to ensure liquidity for AI infrastructure expansion and working-capital needs. It also expanded its AI and data-center product portfolio by introducing high-density liquid-cooled and air-cooled servers supporting NVIDIA’s next-generation “Vera Rubin” GPU platform and Intel’s Xeon 6900 series.

Headquartered in Silicon Valley, Supermicro is a high-performance server and storage provider that leverages NVIDIA- and AMD-based GPU rack servers and direct liquid-cooling technology for hyperscale data centers and cloud service providers. As the generative AI boom accelerates, most of its revenue now comes from AI infrastructure. Industry observers are closely watching its dependence on a small number of large customers, margin pressure from rapid capacity expansion, and risks related to inventory levels and cash flow.