Supermicro (SMCI) Poised for $4 Billion Annual Revenue and $200 Million EBIT from Saudi DataVolt “Party In The Desert” Partnership

This article does not constitute investment advice. The author holds no shares in any of the discussed companies.

Supermicro Secures a Major Partnership in Saudi Arabia

Supermicro (SMCI) has established itself as a key player in the GPU-as-a-Service market. Recently, the company finalized a significant agreement during President Trump’s investment-centric visit to Saudi Arabia. This partnership marks a pivotal moment for Supermicro, especially in the realm of liquid-cooled AI racks.

Details of the Multi-Year Agreement

The company has entered into a multi-year partnership with DataVolt, a prominent Saudi data center provider. This venture aims to integrate gigawatt-scale renewable energy and net-zero green hydrogen power with advanced server technologies. The aim is to foster the development of energy-efficient data centers capable of supporting future AI workloads.

While the precise terms of the $20 billion deal remain undisclosed, it is expected that Supermicro will be responsible for supplying high-density GPU platforms along with rack-scale liquid cooling systems. These supplies are anticipated to occur over several years, reinforcing Supermicro’s foothold in the burgeoning AI infrastructure sector.

Projecting Revenue from the Agreement

Analysts at Goldman Sachs have estimated that this landmark agreement could translate into approximately $5 billion in yearly revenue, alongside an annual EBIT estimated at around $200 million. They state:

“Assuming a 5-year deal, 5% margins, and the entirety of the $20B represents IT hardware revenue, this would represent $4 billion of annual revenue and $200 million of annual EBIT.”

Analyst Ratings: Divergent Perspectives

Despite the anticipated financial benefits from the DataVolt partnership, Goldman Sachs has maintained a ‘Sell’ rating for Supermicro, with a price target of $24. Currently, SMCI shares are trading at $46.86 during pre-market sessions.

In contrast, analyst Simon Leopold from Raymond James has adopted a more optimistic stance, reaffirming an ‘Outperform’ rating and setting a target price of $41. Leopold argues that this agreement enhances Supermicro’s market presence with a multi-year hardware backlog that could boost future earnings estimates. Nevertheless, he expressed concerns over the project’s timeline, projected for completion by 2028.

Financial Highlights and Market Outlook

Recently, Supermicro reported fiscal Q3 2025 revenues of $4.6 billion, closely aligning with its projections but falling short of Wall Street’s consensus expectation of $5.05 billion. The company’s guidance for Q4’25 revved up expectations slightly, estimating incoming revenues between $5.6 billion and $6.4 billion, which again trails the consensus estimate of $6.81 billion. Furthermore, Supermicro anticipates FY 2025 revenues between $21.8 billion and $22.6 billion, significantly lower than the consensus estimate of $23.5 billion.

Rosenblatt has flagged potential delays in revenue realization, indicating a shortfall of approximately $1 billion tied to ongoing evaluations of NVIDIA’s next-generation Blackwell GPU platforms by its customers. Analyst Kevin Cassidy projects this revenue will shift from the March-ending quarter to the June and September quarters.

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