Supermicro (SMCI) shares tanked more than 20% on Wednesday morning after the AI server firm reported disappointing earnings for its fiscal fourth quarter (Q4). 

The company’s financial release blamed tariffs for the quarterly weakness, although chief executive Charles Liang confirmed on the conference call that SMCI has “taken measures to reduce impact” of tariffs. 

Including the post-earnings plunge, Super Micro stock is down nearly 25% versus its recent high. 

SMCI Stock Crashes on Downbeat Guidance

Despite the management’s seemingly positive remarks on the tariff front, its outlook for the current quarter isn’t particularly inspiring either. 

Supermicro sees its per-share earnings (EPS) falling between $0.40 and $0.52 in its fiscal Q1 on $6.5 billion in revenue. Analysts, in comparison, were at $0.59 a share and $6.6 billion, respectively. 

According to the company’s chief executive, “specification changes from a major new customer” and a “lack of working capital” resulted in a revenue shortfall in June, which renders SMCI shares even more unattractive to own on the post-earnings decline. 

BofA Warns of a Further Decline in Supermicro Shares

Bank of America analyst Ruplu Bhattacharya reiterated his “Underperform” rating on SMCI stock today, quoting another hit to gross margins as customers continued to prefer waiting for Nvidia’s (NVDA) next-gen chips. 

More importantly, inventory reserves for older generation products will remain a notable headwind for Super Micro shares in future quarters “as Nvidia and AMD will continue to launch new GPUs with step function changes in functionality,” he told clients in a research note on Wednesday. 

BofA currently has a $37 price target on Supermicro stock, which indicates potential for another 15% downside from current levels. 

Wall Street Isn’t Positive on Super Micro Stock Either

While not as bearish as the Bank of America, other Wall Street firms also caution against buying the post-earnings dip in SMCI stock on Wednesday. 

According to Barchart, the consensus rating on Super Micro Computer currently sits at “Hold” only, with the mean target of about $43 suggesting the company’s share price could decline another 5% from here.