Assessing Super Micro Computer Ahead of Q3 Earnings

Super Micro Computer SMCI is scheduled to report its third-quarter fiscal 2024 results on Apr 30.
The company has been benefiting from its diverse business model, which encompasses Graphics Processing Units (GPU), AI, core computing, storage, 5G telco, edge and Internet of Things solutions. Its expanding pipeline of AI-backed software solutions continues to strengthen its foothold in the booming AI market in the to-be-reported quarter.
Strength in the Server & Storage Systems segment, owing to continuous AI integrations into its storage systems, is expected to have been the key growth driver of the company during the quarter under review.
Strong momentum across its H100-based systems and AI inferencing systems are likely to have boosted the performance of the Subsystems & Accessories segment in the third quarter.
The Zacks Consensus Estimate for third-quarter fiscal 2024 Subsystems and accessories revenues is pegged at $277.71 million, indicating a significant jump from the year-ago quarter's reported figure of $119.60 million.
The company's solid traction across top-tier data centers, emerging cloud service providers, enterprise/channel, and edge/IoT/telco customers, owing to its robust next-generation AI and CPU platforms, is expected to have boosted its performance in the to-be-reported quarter.
Strengthening demand and improving supply conditions for GPU and rack-scale total IT solutions are likely to have continued aiding its top-line growth in the quarter under review.
However, macroeconomic uncertainties and a growing competitive scenario are likely to have been major headwinds for the company.

Estimates Trend

For the third quarter of fiscal 2024, SMCI expects revenues between $3.7 billion and $4.1 billion. The Zacks Consensus Estimate for sales is pegged at $4.11 billion, indicating a significant jump from the year-ago fiscal quarter's reported value of $1.28 billion.
SMCI anticipates non-GAAP earnings between $5.20 and $6.01 per share. The consensus mark for earnings is pegged at $5.97 per share, indicating growth from the year-ago quarter's reported figure of $1.63 per share.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That's exactly the case here.
Super Micro Computer has an Earnings ESP of +16.35% and a Zacks Rank #3.

Stocks to Consider

Here are some stocks worth considering, as our model shows that they have the right combination of elements to beat on earnings this season.
APi Group APG has an Earnings ESP of +2.06% and a Zacks Rank #1 at present.
APi Group is scheduled to release first-quarter 2024 results on May 2. The Zacks Consensus Estimate for APG's earnings is pegged at 32 cents per share, indicating growth of 28% from the year-ago quarter's reported figure.
Amazon AMZN has an Earnings ESP of +11.66% and a Zacks Rank #2 at present.
Amazon is set to announce first-quarter 2024 results on Apr 30. The Zacks Consensus Estimate for AMZN's earnings is pinned at 82 cents per share, indicating a jump from the year-ago quarter's reported figure of 31 cents per share.
Cardinal Health CAH has an Earnings ESP of +1.11% and a Zacks Rank #3 at present.
CAH is scheduled to release third-quarter fiscal 2024 results on May 2. The Zacks Consensus Estimate for CAH's earnings is pegged at $1.95 per share, indicating growth of 12.1% from the year-ago quarter's reported figure.
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