Charles Liang, CEO of Super Micro (Walid Berrazeg/Getty Images)

Super Micro sinks as Wall Street hates its trade-off of profitability for sales

Companies tied to the AI boom generally get rewarded for aggressively expanding capacity. That’s not the story this time.

Luke Kawa

11/5/25 8:21AM

Throughout the AI boom, investing aggressively in your near-term capabilities for the promise of bigger profits down the road has generally been applauded by investors.

Not so for Super Micro Computer, at least this quarter.

Shares of the server company are getting whacked this morning after its fiscal Q1 earnings report, where management delivered a much better Q2 sales outlook than analysts had anticipated, but with weaker-than-expected guidance for earnings per share. Profitability is taking a hit as the company offers preferential pricing to bigger customers and then looks to bolster its capacity to meet those huge orders, with hopes of many more to come.

“The company is placing greater investment for a strategic mega-scale AI win and expects margin to improve as it leverages investments,” Bloomberg Intelligence senior industry analyst Woo Jin Ho wrote. “This is no guarantee, as Super Micro didn’t provide a full-year margin outlook.”

When you’re selling umbrellas during a rain storm, you’re not only supposed to be able to sell more of them, but it’s also presumed that you’re able to display some decent pricing power that supports profitability.

Dell and Super Micro are both server companies looking to hitch their wagons to the explosive growth of AI. Their margin outlooks are heading in different directions.

“Supermicro received its largest design award in the company’s history, which is leading to better than expected revenue in F2Q26 and FY26,” Needham analyst N. Quinn Bolton wrote. “However, this program is expected to compress gross margin in the near term due to higher costs associated with the initial ramp along with lower margins this design award carries.”

Bolton cut his price target on the stock to $51 from $60. JPMorgan also reduced its price target to $40 (from $43), while Rosenblatt lowered its view of where shares are going to $55 from $60.

Not only this big contract, but also new production facilities that are being brought online to meet increased demand are expected to weigh on margins in the near term. To continue the analogy, to be able to sell umbrellas in a persistent downpour, you also need to be able to produce a lot of what people want to provide shelter from the storm.

During the conference call, executives were inundated with questions about the margin outlook.

“We’re going into a quarter where we are ramping one of the largest clusters in the world,” said CFO David Weigand. “We are ramping a new product line at mega scale. And so therefore, we were being a little conservative on the margin because we will have a higher cost as we ramp production and shipment.”

CEO Charles Liang said that a double-digit gross margin is still in Super Micro’s plans; it’s just going to “take a little bit longer.”

J. Edward Moreno30m

Molina implodes after earnings miss, gloomy guidance

Molina Healthcare tanked after it reported earnings results that missed Wall Street expectations and gave disappointing full-year guidance.

For the last three months of 2025, Molina reported:

Adjusted losses per share of $2.75, compared to the $0.34 earnings per share analysts polled by FactSet were expecting. The company said about $2 per share of its earnings miss was attributable "retroactive premium adjustments attributable to the Company’s Medicaid business in California and ongoing medical cost pressure in Medicare and Marketplace."
Revenue of $11.3 billion, compared to the $10.8 billion the Street was penciling in.
A medical cost ratio of 94.6%, higher than the 93.1% analysts expected.

For the full year in 2026, Molina expects:

Adjusted earnings per share of at least $5.00, compared to the $13.66 analysts were expecting. Molina said its guidance takes into account ongoing losses in its traditional Medicare Advantage Part D business, which it now plans to exit in 2027.
Revenues of about $42.2 billion, compared to the $46.6 billion analysts had penciled in.
Its medical cost ratio to sit at 92.6%, while analysts had expected 91.4%.

Health insurers have been under pressure for the past year amid rising health costs. Molina, one of the largest providers of ACA marketplace plans, has taken a hit as tax credits for the program lapsed in January.

Molina's report also dragged down competitors including Centene, which is also a major provider of ACA plans and reports earnings Friday morning.

Bloom Energy surges after topping expectations for sales, EPS

Here’s how the print looked at first glance.

Matt Phillips44m

Max Knoblauch51m

Roblox surges as it guides for stronger-than-expected full-year bookings, touts AI vision

Kid-centric gaming platform Roblox reported its fourth-quarter results after the market closed on Thursday. Its shares surged more than 20% in after-hours trading.

For the full year ahead, Roblox guided for bookings of between $8.28 billion and $8.55 billion, which would represent annual growth of 22% to 26%. That’s well ahead of Wall Street’s estimates: analysts polled by FactSet expected $8.03 billion.

Roblox forecasts Q1 bookings to land between $1.69 billion and $1.74 billion, compared to the $1.7 billion Wall Street consensus estimate.

An average of 144 million daily users logged on to Roblox in its fourth quarter, beating estimates of 138 million and up 69% from last year. The platform paid out $1.5 billion to creators last year, up from $922 million in 2024.

Roblox engagement surged in 2025, a year marred by several legal issues surrounding child safety on the platform. Late last year, analysts began to warn that some of its most popular titles were past their peak.

Recently, shares of the company have dropped on investor fears of Google’s Project Genie AI tool, which generates playable worlds. As of Thursday’s close, Roblox had shed more than $10 billion in market cap since Project Genie launched. On Wednesday, Roblox appeared to answer Genie’s release with the open beta launch of its own “4D” generative-AI tool. Roblox’s tool lets users generate objects made up of multiple working parts (e.g., a drivable car with spinning wheels) as opposed to static 3D objects.

In its letter to shareholders, Roblox said it was “innovating aggressively in AI to accelerate the creation of content, improve the safety of our platform, and fuel ongoing user engagement, discovery and monetization improvements.”

Jon Keegan

Amazon slides as it misses on Q4 earnings, gives downbeat profit guidance

The tech giant also forecast it would spend $200 billion on capex in 2026.