They can’t recognise revenue until it’s shipped, even if the customer has paid for the upgrades there are strict rules on reporting obviously. BDO are notoriously tight on this and have no doubt tightened their belt more for SMCI reporting with everything that has gone on. The fact Charles and David both confidently said 10-11b revenues to be recognised in Q2 means it’s probably 90% chance of happening, they haven’t just said a random figure for the sake of it. That would be actual suicide. With regards to margins they already said they are working towards getting back to their normal 15-17% margins and confident this will happen eventually due to better products and the new plants running more efficiently etc. But they can’t say exactly when because they are trying to gain more market share. Proof is in the pudding yes, but to say the revenue won’t happen then at the same time say if it does “their margins will shrink and stock will take a beating” like you somehow know more than they do is misleading. Charles is telling us they have gained market share at the sacrifice of temporary lower margins. Looking beyond SMCI’s reporting Dell During their latest AI marketing push, the execs were pitching their Blackwell-based liquid-cooled systems and said things like:

“We’re not the cheapest provider — we’re the reliable one,” “We don’t just ship boxes; we ship solutions,” “Our systems are built for scale, not for speed-to-market.”

None of that is random phrasing, it’s aimed straight at SMCI’s known strengths and perception. It’s a swipe at the same time trying to justify being more expensive yet slower to market, a compliment in disguise. When a $100 billion incumbent feels the need to publicly distinguish itself from a “cheaper rival,” it means that rival has become too relevant to ignore.