Supermicro and Arista Networks crush expectations as AI infrastructure wins again

Growing nervousness about spending on the artificial intelligence boom has made technology stocks increasingly volatile this year, but all it takes is one good quarter to reignite investor confidence, as Super Micro Computer Inc. and Arista Networks Inc. both showed today.

The companies are still relatively small fry in terms of the bigger AI picture, but as key data center infrastructure providers, they have shown consistently strong revenue growth over the last couple of years, and neither looks to be slowing down.

Indeed, Supermicro’s sales shot up by an incredible 298% in its latest quarter as it powered its way to yet another impressive revenue beat. The server maker reported fiscal 2027 first-quarter earnings before certain costs such as stock compensation of $1.81 per share on sales of $19.95 billion, cruising past Wall Street’s guidance of $1.23 per share in earnings and $17.35 billion in sales. After-hours, the company’s stock gained more than 6%.

Meanwhile, Arista delivered third-quarter earnings of $1.20 per share on revenue of $3.66 billion, up 58% from a year earlier, surpassing the Street’s target of $1.08 per share in earnings and $3.33 billion in revenue. Its stock moved higher too, and rose more than 9% in the late-trading session. The company is a major supplier of networking equipment for AI data centers, helping to link together massive clusters of graphics processing units and other high-powered chips.

Supermicro Chief Executive Charles Liang (pictured) said his company continues to sell its servers and storage solutions as fast as it can build them. “Supermicro’s transformation into a total AI and IT data center solution provider continues to accelerate,” he added.

Investors were looking for signs that Supermicro may face headwinds in the coming months, with the impact of rising component costs being one of their major concerns. But the company’s results seem to have reassured doubters that supply issues could impact its profitability. Notably, Supermicro said its gross margin rose to 12.8% in the quarter, higher than the 9.3% margin recorded in the same quarter one year ago.

Supermicro’s guidance for the current quarter was impressive too. The company said it’s looking for earnings of between $1.66 and $1.90 per share on sales of between $19.5 billion and $21.5 billion in its second quarter. That’s much higher than the Street’s forecast, which calls for earnings of $1.14 per share and sales of $18.1 billion.

Arista’s 58% revenue growth was the biggest year-over-year jump since the company went public back in 2014, and it could well break that record again if its guidance holds true. The company said it’s looking for fourth-quarter earnings of between $1.26 and $1.30 per share on sales of $3.95 billion at the midpoint of its range. That would represent growth of 59%. The guidance was better than expected, with Wall Street looking for earnings of just $1.16 per share on sales of $3.65 billion.

Arista Chairperson and Chief Executive Jayshree Ullal told analysts that even she was surprised by how well the company did in the prior quarter. “This strong momentum across customer sectors highlights our increased relevance for the generative and agentic AI era,” she said.

Photo: Supermicro