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Luke Kawa

Super Micro slumps after announcing preliminary Q1 net sales far below Wall Street’s expectations

Super Micro Computer is slumping after management delivered a preliminary revenue update that came in far short of what Wall Street was expecting.

Net sales for the quarter ended September 30 (the company’s fiscal Q1 2026) will be about $5 billion, according to a press release, which is below its guidance for $6 billion to $7 billion and below the average analyst estimate of just short of $6.5 billion.

Management attributed this to “recent design wins in excess of $12 billion, requesting delivery in the second quarter of fiscal year 2026 (Q2’26).”

Charles Liang, president and CEO, reiterated the company’s expectation of $33 billion in revenues for the fiscal year that started in July, saying, “We see customer demand accelerating, and we are gaining AI share.”

If net sales do come in around $5 billion, that would be a roughly 20% decline versus the same period in 2024.

This is not the first time this year that Super Micro has pre-announced a revenue miss and effectively blamed it on timing issues.

On April 29, the company pre-announced disappointing results and said, “During Q3 some delayed customer platform decisions moved sales into Q4.” Pushing back the timing of a big revenue ramp has been a common theme for Super Micro throughout the year.

As we wrote in August:

“If I could boil down the cause of the substantial volatility in shares of Super Micro Computer this year to one sentence, it would be this: it’s in the AI business — which is clearly booming — and management makes big promises on sales that it fails to deliver on.

Sales are the football, management is Lucy, and investors are Charlie Brown, falling for each renewed promise and then having it yanked away and landing flat on their backs.”

Super Micro scheduled an earnings call for November 4 to discuss the outlook for second-quarter revenues and deliveries.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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