(Reuters) - Super Micro Computer ( SMCI ) 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 company's fourth-quarter adjusted gross margin was 11.3%, compared with analysts' 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 current-quarter profit below Wall Street targets but expects first-quarter and annual sales above estimates.

Rival Dell Technologies ( DELL ), 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 ( NVDA ) and Broadcom ( AVGO ) rose 1.2% and 1.4%, respectively.

Among the biggest beneficiaries of the AI boom, Super Micro's shares have more than doubled in value in 2024, making it the best performing S&P 500 stock up to Tuesday's close.

It trades 17.24 times its 12-months forward earnings estimates, compared to Dell's 11.07 multiple.