Increasing nervousness over spending on the artificial intelligence boom has made technology stocks increasingly volatile this year, but all it takes is one good quarter to restore investor confidence, Super Micro Computer Inc. and Arista Networks Inc. both showed today.
The companies are still relatively small in terms of the bigger picture of AI, but as key data center infrastructure providers, they have seen consistently strong revenue growth in recent years, and neither appears to be slowing down.
In fact, Supermicro’s sales skyrocketed an incredible 298% last quarter, achieving another impressive top line increase. The server maker reported first-quarter fiscal 2027 profit before certain costs such as stock compensation of $1.81 per share on revenue of $19.95 billion, beating Wall Street’s forecast of $1.23 per share in profit and $17.35 billion in revenue. The company’s shares rose more than 6% in after-hours trading.
Meanwhile, Arista posted third-quarter earnings of $1.20 per share on revenue of $3.66 billion, up 58% from a year ago, beating the Street’s target of $1.08 per share in earnings and $3.33 billion in revenue. The stock also gained, rising more than 9% in the late trading session. The company is a major supplier of networking equipment for AI data centers, helping to connect massive clusters of graphics processors and other high-performance chips.
Supermicro CEO Charles Liang (pictured) said his company continues to sell its servers and storage solutions as quickly as it can build them. “Supermicro’s transformation into a full-service provider of AI and IT data center solutions continues to accelerate,” he added.
Investors were looking for signs that Supermicro could face headwinds in the coming months, with the impact of rising component costs one of their biggest concerns. But the company’s results appear to have reinforced doubters that supply problems could hurt its profitability. Notably, Supermicro said its gross margin increased to 12.8% in the quarter, higher than the 9.3% margin in the same quarter last year.
Supermicro’s forecast for the current quarter was also impressive. The company expects second-quarter earnings of $1.66 to $1.90 per share on revenue of $19.5 billion to $21.5 billion. That’s much higher than Street forecasts for earnings of $1.14 per share and revenue of $18.1 billion.
Arista’s 58% revenue growth was its biggest year-over-year increase since the company went public in 2014, and it could well break that record again if its forecast holds true. The company expects fourth-quarter earnings between $1.26 and $1.30 per share on revenue of $3.95 billion, at the midpoint of its range. That would correspond to growth of 59%. The forecast was better than expected: Wall Street expected earnings of just $1.16 per share on revenue of $3.65 billion.
Jayshree Ullal, chairman and chief executive of Arista, told analysts that even she was surprised at how well the company performed in the previous quarter. “This strong momentum across customer sectors underscores our increasing relevance to the generative and agentic AI era,” she said.
Photo: Supermicro
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