Wall Street analysts are weighing the chances that data center specialist Super Micro Computer could be delisted from the Nasdaq exchange over its accounting issues. The uncertainty has hurt Super Micro stock and boosted shares of rival Dell Technologies.
Last Wednesday, Super Micro disclosed that Ernst & Young had resigned as its accountant after citing concerns about the company's financial reporting. That news was on top of a delay in filing its annual 10-K report and a possible investigation by the U.S. Department of Justice.
"It arguably appears to be an uphill battle for SMCI to remain listed at this point," Wedbush Securities analyst Matt Bryson said in a client note Monday. Super Micro previously was delisted in 2018 for delays in filing financial reports.
The company has until Nov. 20 to file a plan to return to compliance with Nasdaq requirements.
Bryson reiterated his neutral rating on Super Micro stock but slashed his price target to 32 from 62. Super Micro shares hit a record high of 122.90 on March 8.
On the stock market today, Super Micro stock fell a fraction to close at 26.03. Meanwhile, Dell stock slid 0.8% to 129.85. Last week, Dell stock rose 6.8% while SMCI stock tumbled 44.9%.
"We have had mixed feedback regarding whether concerns around SMCI late filing and/or the reported DOJ investigation might be impacting customer's decisions," Bryson said. "But net, given the above, we are more cautious around SMCI's ability to meet/exceed fiscal Q1 expectations or guide to consensus for fiscal Q2."
Super Micro Stock: Business Update Coming
San Jose, Calif.-based Super Micro plans to provide a fiscal first-quarter business update after the market close Tuesday.
Meanwhile, Dell is poised to gain market share in data center servers for artificial intelligence applications, Melius Research analyst Ben Reitzes said in a client note Monday.
"Make no mistake, Super Micro isn't just Dell's competitor — it's 'the' competitor for AI servers," Reitzes said. "It's the one that Elon Musk plays off Dell — and the one we always cared about most in terms of engineering and cooling chops (Dell and Super Micro split share with Elon)."
AI data center customers are starting to become concerned about Super Micro's operational issues, Reitzes said.
"Many of SMCI's customers have aspirations of going public (and they) simply can't afford any nonsense into their make-or-break capital-raising processes for 2025," he said.
AI chipmaker Nvidia reportedly has moved some of its Super Micro orders to other suppliers, including Taiwan-based Gigabyte and ASRock, DigiTimes said Monday. Nvidia is seeking to maintain supply chain stability for AI servers, the report said.
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