Super Micro Computer Inc. (SMCI) crushed expectations for the second quarter by reporting $12.68 billion in revenue, way above the $10.42 billion Wall Street had in mind. That’s not some small beat. Last quarter, they brought in $5.0 billion. A year ago, it was $5.7 billion. This time, they more than doubled both. It was their highest quarterly revenue to date. Net income came in at $401 million, which was up from $168 million last quarter and $321 million in the same quarter a year ago. The company’s diluted earnings per share hit $0.60, up from $0.26 in Q1 and $0.51 in Q2 last year. On a non-GAAP basis, SMCI reported $0.69 per share, compared to $0.59 the same time last year. SMCI’s gross margin falls even as revenue beats all estimates Despite all that revenue, SMCI’s gross margin for the quarter was 6.3%, a big drop from 9.3% in Q1 and 11.8% in Q2 2025. The non-GAAP gross margin was 6.4%, compared to 11.9% a year ago. Total cost of sales hit $11.88 billion, while gross profit was $798.6 million. Expenses also climbed. Research and development cost $180.8 million, sales and marketing came in at $73.1 million, and general and administrative expenses were $70.4 million. That brought total operating expenses to $324.3 million. From that, operating income was $474.3 million. Interest income landed at $51 million, while interest expense was $25.4 million. After taxes of $99.2 million and a small loss of $492, SMCI ended with net income of $400.6 million. That’s their final number on a GAAP basis. Stock-based compensation was no small line item. It added up to $90.5 million total, including $6.8 million under cost of sales, $59.5 million under R&D, $10.3 million under sales and marketing, and $13.8 million under general and admin. Balance sheet nearly doubles in six months By December 31, 2025, SMCI had $4.1 billion in cash and $4.9 billion in bank debt and convertible notes. The company’s total assets reached $28.0 billion, up from $14.0 billion just six months earlier. That jump was driven by a huge rise in accounts receivable to $11.0 billion and inventories up to $10.6 billion. They also recorded $538.6 million in property and equipment, $655.4 million in deferred taxes, and $683.1 million in other assets. Total current assets hit $26.1 billion. On the liabilities side, accounts payable spiked to $13.75 billion, and total current liabilities were $15.4 billion. Deferred revenue came in at $774.8 million short-term and $527.9 million long-term. Convertible notes stood at $4.65 billion, and other long-term liabilities were $408.8 million. Total liabilities reached $21.0 billion. Stockholders’ equity closed at $6.99 billion, which includes $4.0 billion in retained earnings and $2.99 billion in paid-in capital. There was also $162,000 in non-controlling interest. Cash flow went negative while investments continued Cash flow didn’t look pretty. For the quarter, SMCI burned through $24 million in operations and spent $46 million on capital investments. For the full six-month stretch, the company reported net cash used in operations of $941.4 million. This came from large cash outflows tied to accounts receivable and inventory growth. During the same six-month period, $53.5 million went to buying equipment, and $25 million was used to buy equity securities. That pushed net investing cash flow to negative $78.5 million. On the financing side, they raised $238.8 million from credit lines and loans, but paid back $123.4 million. They also spent $71.1 million on equity settlement taxes, and received $12.9 million from option exercises. That left net financing cash flow at $47.5 million. At the end of the period, cash, cash equivalents, and restricted cash dropped by $978.6 million, leaving them with $4.19 billion on hand. Foreign exchange trimmed off $6.2 million. Outlook sets $12.3 billion minimum for Q3 According to the earnings report, SMCI expects Q3 revenue to reach at least $12.3 billion. That’s slightly below Q2 but still strong. GAAP earnings per share are projected at $0.52, and non-GAAP EPS at $0.60. These estimates assume a tax rate of 19.6% for GAAP and 20.2% for non-GAAP, with share counts of 684 million and 699 million, respectively. The forecast includes $62 million in stock-based comp, with a $19 million tax impact excluded from non-GAAP results. For the full fiscal year 2026, SMCI expects at least $40.0 billion in sales. CEO Charles Liang said the company is growing fast to meet demand. He credited SMCI’s AI server and storage systems, saying they help customers scale quickly and save costs. Liang also pointed to their Data Center Building Block Solutions, which he claims make AI deployments faster and cheaper. The smartest crypto minds already read our newsletter. Want in? Join them .