With shares having posted an eye-watering 71% loss from a record high of $119 in March, Super microcomputer (NASDAQ: SMCI) is trading at a significant discount to its peak. Shares are reeling after allegations related to the company’s accounting practices and other challenges.
But despite the bad press, Supermicro’s business continues to thrive amid soaring demand for artificial intelligence (AI). Will this be enough to save the stock? Let’s dig deeper to see how the company could perform in 2025 and beyond.
Supermicro is a prime example of how quickly a Wall Street darling can fall from grace. The crisis began on August 27, when short-selling firm Hindenburg Research released a report accusing the computer hardware maker of accounting manipulation, self-dealing and sanctions evasion related to Russia’s invasion of Ukraine.
The next day, Supermicro announced it would delay the filing of its fourth-quarter report, citing the need to assess the effectiveness of its internal controls. Shortly afterwards, accountant Ernst & Young resigned. These events raised even more suspicion and introduced the possibility that the company would do so are removed by the Nasdaqwhich could affect liquidity and make shares less attractive to institutional investors.
Although Supermicro’s share price has collapsed in recent months, there is light at the end of the tunnel. To start with, the company has found a new accountant (BDO USA). And on December 6, it received an extension from Nasdaq, giving it until February 25 to file its delayed annual reports. In the meantime, things still seem to be going well.
Supermicro’s big break may have come in November, when an independent special committee released unaudited earnings data. The company expects fiscal first quarter revenue of $5.9 billion to $6 billion. While this is below previous expectations of $6 billion to $7 billion, it represents a growth rate of 180% compared to the prior year period.
Supermicro’s growth rate dwarfs other AI leaders Nvidia And Advanced micro deviceswho saw their turnover grow by 94% and 17%respectively in their most recently reported quarters. Supermicro’s explosive momentum is likely continues due to exposure to the possibilities of AI.
Super Micro Turns graphics processing units (GPUs) made by Nvidia and other chip makers into turnkey computer servers for data centers, giving it a middleman role in the AI hardware market. Next-generation AI GPUs, such as Nvidia’s Blackwell or AMD’s MI350, are likely to drive demand for its servers, as their technical advantages could make them must-have items for companies looking to stay competitive.