Super Micro computer (NASDAQ:SMCI), which manufactures servers and other hardware for data centers, is the top trending name on Yahoo Finance this morning. SMCI shares tumbled 13% in early trading after the technology giant reported mixed quarterly results and issued mixed guidance for the current quarter.

However, Super Micro’s revenue forecast for the fiscal year ending next June was well above analysts’ average estimate.

One bank responded to the mixed quarterly report by maintaining a neutral rating on the stock, pointing out that the company’s profit margins remained far below its expectations.

Mixed results and forecasts

In its fiscal fourth quarter ended in June, Super Micro earned $6.25 per share, well below analysts’ average forecast of $4.69. However, the company’s fourth-quarter revenue, which rose 144 percent from the same period last year to $5.3 billion, was roughly in line with the average forecast.

In terms of guidance, the company forecast first-quarter revenue of $6 billion to $7 billion, well above the average estimate of $5.45 billion. However, Super Micro expects first-quarter earnings per share (excluding some items) of $6.69 to $8.27. The midpoint of the range is $7.49, just below the average analyst estimate of $7.58.

On the other hand, Super Micro expects revenue of between $26 billion and $30 billion for the fiscal year ending June 30, 2025. This is well above the average analyst forecast of $14.94 billion.

SMCI shares: Margins cause concern

Given the company’s high revenue forecast, Bank of America expects demand for its products to remain high. The bank pointed out that $800 million of the company’s revenue will be recorded in the current quarter rather than the last quarter due to supply constraints.

However, the bank noted that the company’s gross margin was 11.3% in the fourth quarter, well below the bank’s estimate of 13.6%. The miss was primarily due to the company’s expenses related to its efforts to launch new liquid cooling products and its increased sales to hyperscalers, whose purchases are less profitable for Super Micro than those of other customers. The bank does not expect the company’s margins to recover to their previous levels until around June 2025. It maintained its rating on Super Micro stock at “neutral.”

At the time of publication, Larry Ramer held a long position in SMCI. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publishing policies..

At the time of publication, the editor in charge did not hold any positions (either directly or indirectly) in the securities mentioned in this article.