The boom in the AI computing power chain has been verified! Wedbush: Ultra Micro Computer (SMCI.US) gross profit margin “exploded” to benefit Nvidia and Dell

The Zhitong Finance App learned that Wedbush released a report saying that the gross margin of ultra-micro computers (SMCI.US) for the fourth fiscal quarter greatly exceeded expectations. This industry signal also favors Dell (DELL.US), HPE Technology (HPE.US), and Nvidia (NVDA.US). Wedbush maintains a “neutral” rating for ultra-microcomputers, with a price target of $34.

Before the US stock market on Wednesday, ultra-microcomputer shares surged about 16%. According to preliminary results released earlier by the company, the gross margin for the fiscal quarter ending June 30 is expected to be between 15% and 17%, far exceeding the 8.2%-8.4% guidance previously given, mainly due to favorable changes in customer structure and product portfolio.

The AI server manufacturer also revealed that revenue for the fourth fiscal quarter will fall at the low end of the previously given guidance range of 11 billion to 12.5 billion US dollars (median value of 11.75 billion US dollars in the range), and the market generally expects 11.68 billion US dollars. The backlog of orders reached a record high as new orders for the quarter surpassed $60 billion.

Wedbush analyst Matt Bryson said, “We judge that due to the current shortage of parts, the supply of complete machines is insufficient, and manufacturers are able to take control of the pricing initiative. If this trend continues, ultra-microcomputer's gross profit margin and earnings per share for the third quarter of the 2026 natural year and for many subsequent quarters are expected to be significantly higher than previously anticipated. In terms of orders, given the tight supply of parts, we are somewhat concerned that the entire industry may experience a wider phenomenon of repeated orders, but the new order data for ultra-microcomputers is certainly good news.”

The analyst admits that the gross margin of ultra-microcomputers had not been predicted to rise so drastically before, and sorted out the core drivers for performance exceeding expectations:

First, from June to July, the market continued to report that products such as AI motherboards (Nvidia Grace Blackwell, Blackwell, Hopper series), computing power hardware, and memory were in short supply, and high-profit AI server shipments could not meet strong demand.

Second, the shortage of hardware supply gives ultra-micro computers a pricing advantage. At the same time, the company guides customers to purchase high-value-added models, equipped with more self-developed supporting solutions, and optimized the profit structure.

Third, revenue falls short of the regional center, or stems from the postponement of data center construction projects for some major customers, and project delays have also indirectly increased the sales share of the company's high-margin products.

Furthermore, the backlog of orders for ultra-microcomputers has increased dramatically, as evidenced by institutional research feedback: a large number of data center orders will drive the entire industry's demand for general hardware procurement next year.

Bryson pointed out that if its logical judgment that ultra-microcomputer performance exceeds expectations is established, server vendors such as Dell, HPE, and Gigabyte will all benefit from the same industry supply and demand pattern.

The analyst added that the shortage of server components is beneficial to the broader supply chain (such as CPU, GPU, memory, etc.).

Bryson said, “In the current situation where supply is limited and future orders increase, Nvidia is undoubtedly the biggest beneficiary. There are two reasons: currently and in the future, the vast majority of server foundries (including ultra-microcomputers) use Nvidia GPUs; among all hardware vendors, Nvidia has the strongest supply chain support capabilities.”