What happened: Supermicro (SMCI) stock jumped more than 12% in premarket trading on Wednesday.

What’s behind the move: The server maker posted improved margins in its fiscal third quarter and projected revenue above Wall Street expectations, driven by sustained strong demand for artificial intelligence data center infrastructure.

Sales of the company’s servers equipped with Nvidia (NVDA) chips have jumped as customers ramp up capacity to train and run artificial intelligence workloads.

The company posted an adjusted gross margin of 10.1% in the fiscal third quarter, which topped analysts’ estimates of 6.75%. The server maker also sees fourth quarter net sales of $11 billion to $12.5 billion, beating a consensus estimate of $11.16 billion.

What else you need to know: Supermicro stock has been volatile in recent years.

In March, US prosecutors accused Supermicro co-founder Yih-Shyan “Wally” Liaw of unlawfully rerouting billions of dollars’ worth of Nvidia-based servers to China, allegedly in breach of US export control regulations.

The company also faced headwinds tied to accounting and governance concerns. The stock was down roughly 4% year to date prior to the market open.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.

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