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Super Micro Computer (SMCI) delivered explosive gains in early 2024 before dramatically slowing down. In fact, SMCI stock came down just as fast as it went up, and was on the brink of losing its Nasdaq listing. The bloodshed all started after a Hindenburg Research report alleged accounting manipulation. Then, Super Micro’s auditor, EY, resigned.
Ultimately, Super Micro Computer failed to post its 10-Q and 10-K reports on time. This led to SMCI trading as one of the cheapest AI-related stocks on the market. The stock started making a sharp recovery in February once it filed pending reports, preventing a doomsday scenario for SMCI.
You’d expect the stock to hold on to its recent gains since its Nasdaq listing was no longer in danger, but the inverse has happened. SMCI stock has shed a huge portion of its February gains due to broader market fears, and there’s recent news that the company’s CEO is one of the sellers. Let’s examine what has been happening and what you should do.
Super Micro Computer’s Delayed Reports
Super Micro filed its overdue annual report for its fiscal 2024 and its quarterly reports for the first and second quarters of its fiscal 2025 on Feb. 25 and avoided Nasdaq delisting. Revenue for fiscal 2024 more than doubled to almost $14.99 billion, and net income hit $1.15 billion.
Its Q1 results for 2025 showed $5.94 billion in revenue, up 180%. Gross margins were 13.1%. However, Q2 metrics were softer as revenue fell to $5.68 billion (still up 55% year-over-year) with an 11.8% gross margin,
The company also reiterated its revenue target of $40 billion for fiscal 2026 and has a forecast of between $23.5 billion and $25 billion for this fiscal year.
Fiscal 2025 numbers are a bit worse than what analysts had expected, but SMCI dodged a massive bullet as it is no longer embroiled in any major accounting drama.
Management Sells SMCI Stock
As the stock rallied after the report, management took in some profits. CEO Charles Liang sold 46,293 shares at $50.17 on average. This totaled $2.32 million and decreased his ownership by 0.07%.
SVP of Operations George Kao sold right after Liang. He sold 71,720 shares at an average price of $50.48. This totaled $3.62 million and was 78.67% of his holdings.
Robert L. Blair, a director, sold 19,460 shares, split into two transactions at an average price of $43.46 (13,600 sold) and $42.85 (5,860 sold). This totaled $828,557 and was his entire stake in SMCI.
Should You Also Sell?
SMCI stock has declined significantly after those sales. It currently trades at around $39 after a recovery and is arguably a better deal.
The sale of stock by CEO Charles Liang does not seem concerning as it was a small portion of his stake in the company, and he has been regularly selling the stock as most executives do to fund their personal expenses.
The sale of stock by George Kao and Robert L. Blair should concern you more, but they are still small compared to how much the company’s management owns.
With that in mind, I wouldn’t make an investment decision solely because of these transactions.
In fact, SMCI stock could be worth buying right now, as it is one of the cheapest AI and data center stocks. Although broader market declines could threaten it and other tech stocks, I believe SMCI can deliver plenty of upside.
The mean price target of $57.46 implies 47% upside, although analysts are quite split, and the stock has a “Hold” rating.
