Ultramicrocomputer's revenue soared 200% in the third fiscal quarter, but it was still lower than analysts' expectations, causing the company's stock price to plummet 15% after the market and has now stabilized at around 10%.
After the US stock market on Tuesday, April 30, the “AI Monster Stock” ultra-microcomputer released slightly lower than expected results for the third fiscal quarter of 2024 (corresponding to the first quarter of the natural year 2024) and the fourth fiscal quarter results guidance that exceeded expectations.
There was also a dramatic reversal in ultra-microcomputer stock prices. Thanks to the stable demand for its AI servers, the company remained optimistic about the fourth quarter's performance guidance. The fourth quarter results guide, which exceeded expectations, led ultra-micro computers to surge more than 9% after the market on Tuesday. However, due to fierce competition in the server manufacturing industry, the actual revenue for the third fiscal quarter did not meet market expectations, causing the company's stock price to plummet by another 15%, and is currently stable at around 10%.
Ultramicrocomputer dived and closed down 3.54% at the end of Tuesday. It has accumulated 200% increase since this year, and has surged 717.05% in the last year. It far outperformed major market indices such as S&P, NASDAQ, and Dow, but fell more than 24% from the record closing high of $1140.01 per share set on March 8.
Ultra-small revenue fails to meet investors' high expectations
Financial reports show that in the third fiscal quarter of 2024, the total revenue of ultra-microcomputers was US$3.85 billion, up 200.8% year on year, lower than analysts' expectations of US$3.95 billion. The gross margin was 15.5%, up from 15.4% in the second fiscal quarter of FY2024 and down from 17.6% in the same period last year, in line with analysts' expectations. Adjusted EPS was $6.65, up 308% year over year, above analysts' expectations of $5.78.
In terms of performance guidance, Ultra Micro Computer expects revenue of 5.1 billion to 5.5 billion US dollars for the fourth fiscal quarter, higher than analysts' expectations of 4.73 billion US dollars; the adjusted earnings range per share is 7.62 to 8.42 US dollars. For the full fiscal year 2024 (ending June 30 this year), the company expects revenue for the full fiscal year of 14.7 billion to 15.1 billion US dollars, which is higher than the company's original forecast of 14.3 billion to 14.7 billion US dollars. Analysts had expected $14.6 billion. Meanwhile, the company expects the adjusted EPS for the full fiscal year to be $23.29 to $24.09, which is about 8-10% higher than analysts' expectations.
David Weigand, chief financial officer of Ultramicrocomputer, also said that the company's supply chain conditions are continuing to improve. Charles Liang, President and CEO of Ultramicrocomputer, said:
“The company's revenue increased by 200%, and adjusted EPS grew by 308%. This growth rate far surpassed that of other peers in the industry.”
“The company's leadership in the AI infrastructure market has been extended thanks to the strong demand for AI rack-scale plug-and-play (PnP) solutions and our team's ability to develop innovative DLC designs. The company's customer base is currently growing strongly. Had it not been for a shortage of critical components, Ultraman's deliveries would have been higher this quarter.”
“Looking ahead, the company will continue to work on developing advanced solutions, including fully mass-produced DLC, and we expect Ultrafine to continue to seize market share. And we expect AI to continue to grow strongly for many quarters (or even years) ahead.”
However, some netizens said that this was a cost that was too full of expectations. Now we know why ultra-micro executives don't want to announce the guidelines in advance, and we are not satisfied with ultra-micro's revenue.
Earlier, Ultramicrocomputer said in a brief press release on Friday, April 19, that it will announce the results for the third fiscal quarter on April 30. However, the company broke the previous practice of providing initial results, which raised concerns among investors and frantically reduced their holdings of the stock. Also, it should be noted that Ultra Micro did not respond to media inquiries on Friday. As a result, ultra-microcomputer stock prices plummeted by more than 23%, hitting a two-month low.
Ultra Micro also dragged down a number of technology stocks, including Nvidia. Chip stocks and AI concept stocks plummeted on Friday. Nvidia plummeted 10%, the biggest single-day decline since the beginning of the COVID-19 outbreak in 2020, and Arm fell nearly 17%. These tech companies have not released any news that could cause their stock prices to plummet.
Ultramicrocomputers replace HP as a component of the S&P 500
Competitors in the ultra-microcomputer industry include Dell Technologies, HP, etc. In March of this year, ultra-microcomputers replaced Hewlett-Packard as a component of the S&P 500 Index.
Ultramicron produces computers and sells them to enterprises for businesses such as web servers, data storage, and AI training. Nvidia, NASA, and NEC are all partners. Ultramicrocomputer stock prices have soared in recent years, mainly due to strong market demand for their servers (infrastructure for AI chips). For Ultra Micro, it doesn't matter who wins the AI competition. Because if you buy an AI chip, whether from Nvidia or another company, you need to plug in and cool the chip — that's where ultrafine comes in.
Ultra-microcomputer's internally developed server liquid cooling solutions help the company bring products to market faster than competitors that rely on some third-party vendors. Furthermore, the close relationship between ultra-microcomputers and chip giants Nvidia and AMD has given them an additional competitive advantage. Since these chip giants are headquartered less than 10 miles from the microcomputer headquarters, ultra-microcomputers were able to obtain chip samples earlier to test their server prototypes.
Editor/Somer