With shares down an eye-watering 71% from an all-time high of $119 reached in March, Super Micro Computer (NASDAQ: SMCI) trades at a substantial discount from its peak. Shares are reeling after allegations related to the company’s accounting practices and other challenges.
Yet despite the bad press, Supermicro’s business continues to boom amid soaring artificial intelligence (AI)-related demand. Will this be enough to save the stock? Let’s dig deeper to see how the company might perform in 2025 and beyond.
Supermicro is an excellent example of how quickly a Wall Street darling can fall from grace. The crisis started on Aug. 27, when short-selling organization Hindenburg Research released a report accusing the computer hardware maker of accounting manipulation, self-dealing, and sanctions evasion related to the Russian invasion of Ukraine.
The next day, Supermicro announced it would delay filing its fourth-quarter report, citing a need to assess the effectiveness of its internal controls. Shortly afterward, its auditor Ernst & Young resigned. These events raised suspicions further and introduced the possibility that the company might be delisted from the Nasdaq, which could hurt its liquidity and make shares less attractive to institutional investors.
While Supermicro’s stock price has collapsed over the past few months, there has been some light at the end of the tunnel. For starters, the company found a new auditor (BDO USA). And on Dec. 6, it received an extension from the Nasdaq, giving it until Feb. 25 to file its delayed annual reports. Meanwhile, business still seems to be booming.
Supermicro’s big break may have come in November, when an independent special committee released unaudited earnings data. The company expects fiscal first-quarter sales from $5.9 billion to $6 billion. While this is below the previous guidance of $6 billion to $7 billion, it represents a 180% growth rate compared to the prior-year period.
Supermicro’s growth rate dwarfs other AI leaders like Nvidia and Advanced Micro Devices, which saw their top lines grow by 94% and 17%, respectively, in their most recently reported quarters. Supermicro’s explosive momentum is likely to continue because of its picks-and-shovels exposure to the AI opportunity.
Super Micro turns graphics processing units (GPUs) made by Nvidia and other chipmakers into ready-to-use computer servers for data centers, giving it a middleman role in the AI hardware market. Next-generation AI GPUs like Nvidia’s Blackwell or AMD’s MI350 will likely boost demand for its servers because their technical advantages could make them must-have items for companies that wish to remain competitive.
