SMCI Reports Record Q2 Revenue Amid Margin Compression

Super Micro Computer Inc. (SMCI) delivered staggering Q2 earnings with revenue soaring to $12.7 billion, more than doubling both last quarter's $5.0 billion and the year-ago $5.7 billion. This marks the company's highest quarterly revenue on record.

Net income reached $401 million, up sharply from $168 million in Q1 and $321 million year-over-year. Diluted EPS hit $0.60 (GAAP) and $0.69 (non-GAAP), demonstrating robust bottom-line growth despite margin pressures.

The celebration is tempered by concerning margin erosion. Gross margin collapsed to 6.3% from 9.3% last quarter and 11.8% in Q2 2025, with non-GAAP margins following similar trajectory. This occurred despite SMCI crushing revenue estimates, suggesting significant cost inflation or pricing pressures.

Operating expenses climbed to $324.3 million across R&D, sales, and administrative functions. The company recorded $90.5 million in stock-based compensation - a material line item reflecting tech sector compensation trends.