It has been about a month since the last earnings report for Super Micro Computer (SMCI Quick QuoteSMCI - Free Report) . Shares have lost about 19.9% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Super Micro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

SMCI Q1 Earnings Surpass Expectations, Revenues Decline Y/Y

Super Micro Computer came out with first-quarter fiscal 2026 earnings of 35 cents per share, which beat the Zacks Consensus Estimate by 25%. The bottom line declined 52% year over year.

Super Micro Computer posted revenues of $5.02 billion for the first quarter of fiscal 2026, which missed the Zacks Consensus Estimate by 0.56%. The top line declined 15.5% year over year.

SMCI’s Quarter in Detail

Coming to SMCI’s customer verticals, revenues from OEM Appliance and Large Data Center (approximately 68% of total revenues) were $3.4 billion, up 25% year over year but down 6% sequentially. Revenues from the Enterprise/Channel segment (around 31% of total revenues) totaled $1.5 billion, reflecting a 51% year-over-year decline and a 25% sequential decline. The Emerging 5G, Telco, Edge, and IoT segment contributed the remaining 1% of total revenues.

By geography, the United States accounted for 37% of total sales, which declined 57% year over year. Asia represented 46% of revenues, showing a 143% year-over-year surge, driven by hyperscale data center expansion in the region. Europe contributed 14%, up 11% year over year, while the Rest of the World represented 3%, increasing 56% from the prior-year quarter.

SMCI’s non-GAAP gross margin was 9.5% compared with 13.1% a year ago and 9.6% in the prior quarter. The decline reflects an unfavorable customer and product mix, particularly heavier shipments of lower-margin hyperscale and GPU racks. Non-GAAP operating expenses were $203 million, down 2% year over year.

Operating expenses remained elevated due to continued investments in next-generation AI systems, Datacenter Building Block Solutions, and the expansion of production capacity in Malaysia, Taiwan, Europe, and the United States.

SMCI’s Balance Sheet & Cash Flow

As of Sept. 30, 2025, total cash and cash equivalents were $4.2 billion compared with $5.17 billion in the previous quarter. SMCI’s total bank debt and convertible notes stood at $4.8 billion.

The company reported a negative operating cash flow of $918 million and capital expenditures of $32 million.

SMCI Initiates Q2 Guidance

For second-quarter fiscal 2026, SMCI expects net sales between $10 billion and $11 billion and non-GAAP diluted EPS of 46 cents to 54 cents. For fiscal 2026, SMCI raised its revenue outlook to at least $36 billion, up from the prior guidance of $33 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -25.94% due to these changes.

VGM Scores

Currently, Super Micro has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Super Micro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.