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Valued at $22.49 billion, Super Micro Computer (SMCI) develops and manufactures high-performance servers, storage solutions, and networking solutions for clients in the artificial intelligence (AI), 5G, cloud computing, data center, and edge computing markets. The stock soared to prominence as a key partner of specialized AI semiconductor giants like Nvidia (NVDA) and Advanced Micro Devices (AMD), with SMCI's breakout gains and booming financials landing it a spot on both the S&P 500 Index ($SPX) and the Nasdaq-100 Index ($IUXX) in short order earlier this year.
Over the summer, SMCI stock's period of stalling growth turned into an all-out bloodbath following a short report from Hindenburg Research, quickly followed by the delay of the company's 10-K filing, reports of probe by the Department of Justice, and the threat of a Nasdaq delisting as the company's Big 4 auditor, Ernst & Young, resigned in the midst of an audit.
Since then, Super Micro Computer's internal special committee has cleared the company of any fraud or misconduct, while recommending major changes to the company's governance and C-suite to encourage compliance. That news sent the stock soaring earlier this week - but Super Micro's whistleblower isn't backing down from claims of misconduct.
About SMCI Stock
SMCI peaked at $122.90 in March, and hasn't looked back since. The stock is down by a staggering 67% from those highs, even as long-term investors are still sitting on massive gains - Super Micro stock is up 1,722% over the past five years, and has gained 837% in the last three years.
Amid recent headlines, the stock has been notably volatile, with SMCI already rebounding by more than 133% from its mid-November lows. Short sellers piled onto the stock amid reports of its accounting troubles, suggesting that some of the recent rally may be tied to a short squeeze.
Valued at 14.81 times forward adjusted earnings, and 0.98 times forward sales, SMCI is remarkably cheap at current levels for an AI growth stock. That said, investors should consider the rock-bottom valuations against the company's ongoing fundamental issues, as Super Micro Computer has yet to regain Nasdaq listing compliance by filing audited financial statements.
Verdict Arrives for Super Micro Computer
The company has spent most of the second half of this year battling issues related to financial misconduct at the top level. Now, the company has announced that its special internal committee has finished its review and concluded there were no financial irregularities or evidence of fraud among the top brass, and added that the allegations put forth by E&Y in their resignation “were not supported by the facts” found during the probe.
Per recommendations from the internal review, Super Micro Computer will replace its CFO, and add C-suite roles for accounting and compliance, as well as expanding its legal team. However, co-founder Charles Liang will retain the dual roles of Chair and CEO, which leaves one key corporate governance issue flagged by some analysts unresolved.
SMCI's internal committee for the review was comprised of a single board director, Susie Giordano, who was brought on for the purpose of leading the review - supported by outside counsel and forensic accountants. As a director, Giordano is eligible for compensation in SMCI share grants.
While Super Micro has self-exonerated, a former executive at the company is pressing forward with a whistleblower complaint, per a motion filed on Tuesday.
Super Micro Computer Reports Bleak Q1
The company hasn't reported audited results since May, but the tech giant’s stock took a deep dive of nearly 20% after posting its fiscal Q1 2025 preliminary results, which failed to meet expectations. Earnings for the quarter came to $0.75 per share, slightly edging past analysts' $0.73 per share consensus, but SMCI failed to deliver on the revenue front, with $6 billion coming up short against the $6.45 billion forecast.
On top of the weak quarterly results, management provided bleak guidance for the ongoing second quarter, where they anticipate revenue in the range of $5.5 billion to $6.1 billion, a couple of notches below Wall Street's $6.84 billion estimate. Earnings are expected between $0.56 and $0.65 per share.
While investors seem to be focusing largely on headlines about whether SMCI can dodge a delisting disaster, the company's flagging fundamentals shouldn't be overlooked in the fiercely competitive AI market.
Why Analysts Aren't Buying SMCI Stock
Analysts have a consensus “Hold” rating on SMCI, with brokerage firms including Northland and JPMorgan remaining sidelined until there's further clarity on the ongoing compliance issues.
"In our view, the next key watch points for investors to monitor include: whether the new independent auditors, BDO, accept the findings of the Special Committee or decide to undertake their own independent review; and whether Nasdaq supports Super Micro’s request for an extension of time to regain compliance with the Nasdaq continued listing requirements, where the company has already outlined its intention to complete its 10-K and 10-Q filings and become current within the discretionary period available," wrote JPMorgan's Samik Chatterjee wrote in a Tuesday note to clients.
