AI-Driven Server and Storage Demand Likely to Boost SMCI's Q3 Earnings

Super Micro Computer, Inc. SMCI is preparing to announce its third-quarter fiscal 2025 results this week. Amid an artificial intelligence (AI) infrastructure boom, the company is well-positioned for another quarter of strong revenue growth.

Strong Server and Storage Demand to Fuel SMCI’s Sales Growth

The Server and Storage Systems segment remains the cornerstone of Super Micro Computer’s financial strength. The Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $5.08 billion, marking a 37.4% rise compared to the year-ago quarter.

The robust growth forecast is anticipated to have been driven largely by growing demand for graphics processing unit (GPU)-optimized servers tailored for AI workloads. SMCI has been capitalizing on strong customer interest in both air-cooled and direct liquid-cooled (DLC) rack-scale platforms, which are essential for the next wave of AI data center expansion.

Super Micro Computer, Inc. Price and EPS Surprise

Super Micro Computer, Inc. price-eps-surprise | Super Micro Computer, Inc. Quote

Another key factor supporting the segment’s momentum is Super Micro Computer’s early availability of systems built on NVIDIA’s new Blackwell GPU architecture, alongside continued strength in Hopper-based systems. The expansion of the company’s Datacenter Building Block Solutions, which offers customers a one-stop integrated solution for servers, storage, networking and cooling, is expected to have further boosted adoption among enterprises and hyperscalers during the to-be-reported quarter.

Leadership in DLC technology has also been a powerful competitive advantage for Super Micro Computer. As AI training models become more resource-intensive, data centers are increasingly adopting DLC solutions to meet energy efficiency and density requirements. This trend is likely to have boosted the Server and Storage Systems segment’s revenues in the third quarter.

While margins are expected to have remained under pressure due to customer mix and ramping investments in next-generation platforms, the strong top-line growth in the Server and Storage Systems business is anticipated to have helped partially offset earnings headwinds.

SMCI’s Zacks Rank & Other Stocks to Consider

Currently, Super Micro Computer flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Pegasystems PEGA, Paycom Software PAYC and Broadcom AVGO, each sporting a Zacks Rank #1 at present.

The Zacks Consensus Estimate for Pegasystems’ 2025 earnings has moved upward by 14 cents to $3.29 per share in the past seven days, reflecting 8.6% year-over-year growth. Pegasystems shares have risen 53.4% in the trailing 12 months.

The Zacks Consensus Estimate for Paycom Software’s 2025 earnings has moved upward by 4 cents to $8.72 per share over the past 60 days, and suggests a year-over-year increase of 6.2%. Paycom Software shares have soared 20.5% over the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2025 earnings has been revised upward by 4 cents to $6.60 per share in the past 30 days, suggesting an increase of 35.5% from fiscal 2024’s reported figure. Broadcom shares have rallied 47.4% over the past year.

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

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