Super Micro Computer Inc. (NASDAQ:SMCI) handed short sellers a rough morning. The server maker raised its first-quarter revenue outlook by $4 billion at the midpoint late Tuesday and guided gross margins well above its prior range, sending shares sharply higher in Wednesday’s premarket session.
- SMCI stock is rallying. See the chart and price action here.
Guidance Moves Higher
In a preliminary update released after Tuesday’s close, Super Micro said it now expects first-quarter revenue of $18.5 billion to $19.5 billion, compared with earlier guidance of $14.5 billion to $15.5 billion. The company credited stronger demand for AI platforms.
Margins may matter more. Super Micro now sees gross margins of 12% to 12.5%, up from a prior forecast of 10.4% to 10.8%. Thin margins have long been a central criticism of the stock, and the new range marks a meaningful step up from recent guidance.
Short Interest Sets Up a Squeeze
Bears were heavily positioned heading into the update. Short interest stood at about 87.4 million shares, or 17.63% of the float, as of the Sept. 30 settlement date, according to Benzinga Pro data.
A crowded short position paired with an upside surprise can force traders to buy back shares, which adds fuel to a rally.
The next short interest report, covering mid-October positions, should show whether bears started covering before the news hit. Data reflecting trading after Tuesday’s update will take longer to arrive.
A Volatile Track Record
Skeptics still have reasons for caution as SMCI’s results have swung widely too. Revenue topped estimates by 22.2% in the second quarter of fiscal 2026, then missed by 17.6% in the third quarter.
Governance questions also linger. Super Micro named former Western Digital Corp. (NASDAQ:WDC) executive Mark Long as CFO last week, nearly two years after launching a search tied to concerns about its financial and accounting practices, Reuters reported.
Separately, a contractor linked to the company pleaded guilty in a case involving the illegal export of servers containing Nvidia Corp. (NASDAQ:NVDA) AI chips to China.
Super Micro has pointed to earlier statements noting it was not named as a defendant and the case has not affected its business operations, according to Reuters.
Analysts Lift Targets
Rosenblatt maintained a Buy rating Wednesday and raised its price target to $57 from $51, according to Benzinga data. Citigroup and Mizuho both hold Neutral ratings, with targets of $45 and $43, respectively.
Super Micro will report full first-quarter results after the close on Nov. 3 and host a conference call at 5 p.m. ET the same day.
SMCI Price Action: Super Micro stock was up 12.26% at $36.45 in premarket trading Wednesday, according to Benzinga Pro.
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