Kristina Partsinevelos joins 'Squawk on the Street' to discuss the latest earnings from Super Micro.

Supermicro's shares dropped significantly after the company reported weaker-than-expected fourth quarter results and issued soft guidance for the upcoming period. The AI server assembler is experiencing difficulties scaling production to meet demand, which has led to increased cash burn and shrinking profit margins. The company's CEO acknowledged a lack of working capital, resulting in a recent $2.3 billion convertible bond offering to support expansion.

Margins have fallen from 18 percent at the end of 2022 to under 10 percent, as Supermicro competes on price with larger players like Dell and HP Enterprise. Customer concentration remains a risk, with over half of revenues coming from just four clients. While Supermicro's technical leadership and early-to-market AI server configurations are strengths, the company must demonstrate it can convert these advantages into sustainable profitability.

Super Micro missed Q4 estimates

And sticking with chips, Supermicro also in the red, plummeting this morning after weak fourth quarter results and soft guidance. Those shares down more than 18 percent right now. Let's get to Christina Partsanevelis with more on Supermicro. Christina. Thanks, Leslie. Well, the A.I. server assembler really is caught in the classic growth trap. They're trying to scale production to meet A.I. server demand, but they're just burning through cash and sacrificing margins in the process. Supermicro CEO Charles Liang admitted on the earnings call they lacked working capital to expand as quickly as needed, which is why they had to issue a two point three billion dollar convertible bond offering just in June. The margins really tell the story and why you're seeing the stock down so much. They collapse from 18 percent at the end of 2022 to under just 10 percent right now. That's what happens, though, when you're assembling expensive A.I. components. But you have to compete primarily on price against big players like Dell and HP Enterprise. Mizuho points to customer concentration as a risk. There's about four customers who contribute over 50 percent of revenues. One of them is just massive. The bull case, though, hinges on their technical advantages. They're typically first to market with new A.I. server configurations and their liquid cooling technology becomes more valuable as Nvidia rolls out more powerful chips because you've got to cool them down. But they need to prove they can translate technical leadership into sustainable profitability and not always have to wait on Nvidia to deliver their next set of chips. That was a major complaint for this quarter as well. Supermicro, though, is riding one of the biggest infrastructure build outs in tech history. But investors just are learning that being at picks and shovels play doesn't guarantee a gold rush profit when everyone else like Dell and HP are selling shovels to guys. Christina, I wonder what you made of the interview with Lisa Sue over at AMD. They're still a little reticent to put any numbers on these China shipments if and when they begin. Yes, that was a major concern for the upcoming quarter. But if I were to point out, Nvidia spoke to analysts after the United States said they were going to be putting these export controls on allowing those chips to be sent. And Nvidia said that you wouldn't actually see it until Q3, if at best Q4. Why? Because these licenses take a long time to get in place. There's paperwork. And so for AMD's case, just especially in Lisa Sue's interview today, as well as on the earnings call yesterday, she was very unsure as to where they stood with those licenses. I'm paraphrasing. But that was the takeaway from a lot of Wall Street, which is why you can't really price it in. But we knew this. So the negative reaction to the stock shouldn't be contingent on the AMD chips going to China. There's the drivers, the GPU that they said they're going to be ramping into this year and to next year. They have next iterations. She called out Nvidia specifically, saying that their chips compare to Nvidia's Blackwell 200 when it comes to inferencing. So I don't know if we really need to pay as much attention to China for this downward trend on the stock right now. Right. Christina, thanks. Talk soon. Christina Parts, Nevelos. Busy day for semis.

President Trump has been briefed about the shooting at Fort Stewart in Georgia, the White House press secretary says. At least five soldiers were shot before a suspect was apprehended, officials say.

Fort Stewart

Five soldiers shot at Fort Stewart in Georgia; suspect apprehended

A Russian official said President Trump's special envoy to the Middle East, Steve Witkoff, had a "useful and constructive" conversation with Russian President Vladimir Putin in Moscow on Wednesday.

Moscow

Ukraine Invasion

Witkoff, Putin had 'useful and constructive conversation'

The U.S. aims to deploy nuclear power reactors on the Moon and Mars, targeting the first launch by decade’s end. A new NASA directive, revealed by Politico and AFP, calls for appointing a nuclear power czar to choose two commercial proposals within six months, aiming to outpace a Chinese-Russian collaboration.

Washington

NASA races to put nuclear reactors on Moon and Mars

Japan held a memorial service and ceremony for victims and the remaining survivors of the U.S. atomic bombing of Hiroshima, marking its 80th anniversary and renewing pledges of working towards a world without nuclear weapons.

Hiroshima

Hiroshima marks 80th anniversary since U.S. atomic bombing

U.S. Special envoy to the Middle East Steve Witkoff met with Russian President Vladimir Putin in Moscow on Wednesday as President Trump's deadline for a ceasefire with Ukraine looms.

U.S. envoy Witkoff meets Putin as Trump's sanctions deadline nears

The U.S. is warning travelers as cases of chikungunya, a mosquito-borne illness, spreads in China. Health officials in China have ordered mass disinfection measures. The region near Hong Kong reported more than 7,000 cases in recent weeks.

Beijing

U.S. warns travelers as cases of chikungunya increase in China

Japan has commemorated the 80th anniversary of the Hiroshima atomic bombing during World War II. Ceremonies at Peace Memorial Park honoured the victims of the 1945 nuclear attack by US forces.

Japan’s Hiroshima marks 80 years since U.S. atomic bombing

Multiple media outlets in Israel have reported that Israeli Prime Minister Benjamin Netanyahu wants a complete military takeover of Gaza, while almost 600 former Israeli military and security officials are petitioning Washington to stop the fighting.

Jerusalem

Middle East Conflict

Netanyahu reportedly wants complete Gaza takeover

Ukrainian President Volodymyr Zelenskyy said Tuesday that he had a productive talk with President Trump focused on ending the war with Russia. CBS News national security contributor Samantha Vinograd has more.

Kyiv

Zelenskyy holds 'productive talks' with Trump about war

Family members of two of the victims from the 2023 implosion are demanding tougher regulations following the damning report released on Tuesday. Five people died when the submersible imploded off the coast of Newfoundland.

Deadly Titan submersible disaster was preventable, Coast Guard says

The House Oversight Committee has subpoenaed multiple people over the Jeffrey Epstein files, including former President Bill Clinton and former Secretary of State Hillary Clinton. CBS News' Jake Rosen has more details.

House committee subpoenas Clintons, others over Epstein files

U.S. Customs and Border Patrol agents have been directed through a federal court order to stop deportations under President Trump's asylum ban, sources say. CBS News' Camilo Montoya-Galvez has more details.

Court blocks deportations under Trump's asylum ban, sources say

A man suspected of murdering four family members in Tennessee has been captured after a four-day manhunt, authorities said. CBS News' Nicole Valdes has more.

Jackson

Suspect arrested in murders of 4 Tennessee family members

The ruling comes a month after Brazil’s top court ordered the former president to wear an ankle monitor, submit to a curfew and abide by limitations on his activity as legal proceedings investigating an alleged coup plot continue.

State of Rio de Janeiro

Brazil's Supreme Court orders house arrest of Bolsonaro

The US and Lebanon have been holding talks on a roadmap to fully disarm Hezbollah. Lebanon's new leadership has pledged to extend its authority across all its territory but has so far avoided acting against Hezbollah.

Beirut

Lebanon faces renewed pressure to disarm Hezbollah

CBC News had exclusive access to a Canadian Armed Forces plane that dropped about 10,000 kilograms of humanitarian aid into Gaza, the first time Canada joined the airdrop operations. Several countries airdropped food on Monday, but aid organizations agree they are more symbolic than effective.

Ottawa

Canadian military makes aid drop into Gaza

The Prime Minister's Office said to the Chief of Staff, Lieutenant General Eyal Zamir that, "If this does not suit him, you should resign."

Israel's Netanyahu says decision made for full occupation of Gaza

Delegates are gathering this week at the United Nations in Geneva, attempting to negotiate a global treaty to curb plastic pollution. But diplomats and climate advocates warn that efforts by the European Union and small island states to cap virgin plastic production are threatened by opposition.

Geneva

Strong UN treaty on plastic pollution in doubt as talks resume

President Trump announced Friday on social media that he ordered two nuclear submarines to move into more strategic positions near Russia. On Monday, Russian officials downplayed the comments and warned about the risk of nuclear rhetoric.

Russia downplays Trump's announcement about nuclear submarines

U.S. trade representative Jamieson Greer told "Face the Nation" that tariff rates are "pretty much set" ahead of President Trump's Aug. 7 deadline. CBS News MoneyWatch correspondent Kelly O'Grady has the latest.

Global Tariffs

White House holds firm on tariff rates ahead on Aug. 7 deadline

Donald Trump confirmed his special envoy Steve Witkoff will visit Russia, ahead of a deadline the U.S. president has set for Russia to agree to end the Ukraine war or face new sanctions. Witkoff is expected in Moscow in the middle of this week.

U.S. envoy Steve Witkoff expected to visit Russia

New images of emaciated Israeli hostages held in Gaza have horrified Israelis and added pressure on Prime Minister Benjamin Netanyahu to reach a ceasefire with Hamas, even as his government considers another expansion of the nearly 22-month war.

Tel Aviv-Yafo

Videos of hostages increase pressure on Netanyahu for ceasefire

Pope Leo XIV wrapped up a weekend jubilee for more than 1 million young Catholics at a Rome suburb. As a new generation from around the globe celebrated, the pope drew attention to their peers in Ukraine and Gaza who cannot.

Rome

Pope Leo XIV addresses Gaza, Ukraine at youth festival

A shipwreck off Yemen has killed at least 68 people, the UN's migration agency said, with dozens still missing after the boat carrying mostly Ethiopians sank.

Sana'a

Migrant boat sinks off Yemen, killing at least 68

After two unverified videos of Israeli hostages were released, Hamas said the hunger crisis in the region puts them at risk. The militant group said it would deliver food from the Red Cross to the hostages under a couple of conditions, including permanent humanitarian corridors.

Hamas says hunger crisis putting hostages at risk

U.S. President Donald Trump fired the U.S. commissioner of labour statistics after weak jobs numbers signaled tariffs weren’t yet leading to his promised economic boom.

Trump dismisses weak jobs numbers, fires labour statistics chief

Government scientists warn that the 2025 wildfire season in North America is projected to be the longest ever, with fires already causing significant damage across the western United States and Canada. Major blazes have led to evacuations, destruction of historic sites, and widespread air quality alerts.

Santa Barbara

Wildfire season in North America shaping as worst on record

A volcano in Russia's Far East has erupted after sitting dormant for 600 years. Scientists believe the eruption was triggered by the massive earthquake that struck the region last week.

Kamchatka Peninsula

Russian volcano erupts for first time in 600 years

An independent watchdog agency responsible for enforcing a law against partisan political activity by federal employees has opened an investigation into Jack Smith, the special counsel who brought two criminal cases against Donald Trump before his election to the White House last year.

Former Trump prosecutor Jack Smith faces probe by U.S. watchdog

New outbreaks of violence overnight into Sunday (August 3) rocked Syria straining a fragile ceasefire. Meanwhile residents in Sweida are calling access to more humanitarian aid.

Breakdown