Traction in AI-GPU Platform and DCBBS to Propel SMCI's Q2 Earnings

Super Micro Computer SMCI is set to report its second-quarter fiscal 2026 results on Feb. 3, 2026. Investor attention is firmly focused on the company’s server and storage business, which is driven by robust traction in AI servers, NVIDIA Blackwell/B300 GPU platforms, hyperscale customers, and SMCI’s Data Center Building Block Solutions (DCBBS).

Click here to know how Super Micro Computer’s overall fiscal second-quarter results are likely to be.

SMCI to Gain From Rising AI-Infrastructure Demand

Super Micro Computer scaled up its internal power capacity to 52 megawatts as announced in the first quarter of fiscal 2026. The company is on track to scale up its rack capacity to 6,000 racks per month, including 3,000 direct liquid cooling racks within fiscal 2026, as the demand for these products rises to support AI and high performance computing work-loads.

In the second quarter of fiscal 2026, SMCI is expected to benefit from the continuing rising demand for its NVIDIA-based chip integrated rack scale compute architecture for large-scale AI training, enterprise AI inference and training, visualization and design, content delivery and virtualization and AI edge.

SMCI to Benefit From Recovery in Server Business

SMCI’s server and storage revenues grew 50.2% year over year in fiscal 2025. However, in the first quarter of fiscal 2026, it suffered a slowdown due to delayed shipping of its systems at the quarter-end, due to customer configuration changes and data center readiness delays. Lower average selling prices, as the company priced competitively to protect and gain market share, also caused the server revenues to decline.

Since the decline in the server business was majorly non-recurring in nature, this division is expected to return to normalcy in the second quarter of fiscal 2026, implying SMCI’s comeback is supported by the revenue shifts caused by earlier delays. Rising traction in the DCBBS and SMCI’s leadership in the direct liquid cooling space is expected to have benefited SMCI’s performance in the to-be-reported quarter.

SMCI to Gain From Client, Edge and Consumer Space

SMCI has been equipping enterprises with its rack-scale compute architecture for large-scale AI training, enterprise AI inference and training, visualization and design, content delivery and virtualization and AI edge. With this business model at play, the company has projected that it will achieve $36 billion in revenues in fiscal 2026, representing massive 64% year-over-year growth.

The company announced its entrance into the client, edge and consumer market, leveraging its expertise in AI-optimized servers, GPUs, and energy-efficient system design to deliver powerful yet compact solutions for PCs, edge AI, and embedded applications. These factors are likely to have reflected in the to-be-reported quarter.

Inventory Accumulation Due to Rapid Expansion is Concerning

SMCI’s rapid expansion is causing inventory accumulation. SMCI’s first-quarter fiscal 2026 closing inventory was $5.7 billion, up from $4.7 billion in the previous quarter. This situation has spiked its cash conversion cycle from 96 days to 123 days. Super Micro Computer’s working capital challenge from the massive operational scale-up required to meet unprecedented AI rack demand is another concern for the investors.

Other problems faced by the company include SMCI’s customer concentration, and new deals with larger customers have squeezed its margin, as it needs to retain these customers. These mega deals have resulted in higher receivables, resulting in negative free cash flow of $950 million for the first quarter of fiscal 2026. These challenges are likely to have persisted in the second quarter as well.

SMCI’s Zacks Rank & Stocks to Consider

Currently, SMCI carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Amkor Technology AMKR, Arista Networks ANET and Advanced Energy AEIS. While Amkor Technology sports a Zacks Rank #1 (Strong Buy), Arista Networks and Advanced Energy carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1  Rank stocks here.

Shares of Arista Networks have gained 17.8% in the trailing six-month period. Arista Networks is set to report fourth-quarter 2025 results on Feb. 12.

Shares of Advanced Energy have gained 81.7% in the trailing six-month period. Advanced Energy is slated to report third-quarter 2025 results on Feb. 10.

Amkor Technology shares have surged 116.2% in the trailing six-month period. Amkor Technology is set to report fourth-quarter 2025 results on Feb. 9.

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This article originally published on Zacks Investment Research (zacks.com).

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