Aug 7 Reuters Super Micro Computer shares tumbled 12.3 in premarket trading on Wednesday as concerns over the high cost of producing AI server chips weighing on its profit forecast, eclipsing upbeat sales forecasts.

The company39;s fourthquarter adjusted gross margin was 11.3, compared with analysts39; average estimate of 14.1, according to LSEG data, as Super Micro grappled with higher supply chain costs and a tight inventory of key components.

CEO Charles Liang, however, reassured investors that margins would return to a normal range before the end of fiscal 2025 and reiterated its gross margin target in the range of 14 to 17.

The company forecast currentquarter profit below Wall Street targets but expects firstquarter and annual sales above estimates.

Rival Dell Technologies , which makes AI PCs and AI servers, dropped 2.4.

Other chipmakers, however, were broadly higher after taking a hammering recently on concerns over their lofty valuation in a slowing economy. Nvidia and Broadcom rose 1.2 and 1.4, respectively.

Among the biggest beneficiaries of the AI boom, Super Micro39;s shares have more than doubled in value in 2024, making it the best performing SP 500 stock up to Tuesday39;s close.

It trades 17.24 times its 12months forward earnings estimates, compared to Dell39;s 11.07 multiple.

Among the biggest beneficiaries of the AI boom, Super Micro39;s shares have more than doubled in value in 2024, making it the best performing SP 500 stock up to Tuesday39;s…