With shares down a staggering 71% from the all-time high of $119 reached in March, Super Micro Computer (NASDAQ: SMCI) trades at a significant drop 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 thrive amid growing artificial intelligence (AI) demand. 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 the short-selling organization Hindenburg Research released a report accusing the computer hardware manufacturer of account manipulation, self-dealing, and evasion of sanctions related to Russia's invasion of Ukraine.
The next day, Supermicro announced it would delay filing its fourth quarter report, citing the need to assess the effectiveness of its internal controls. Shortly afterwards, his auditor Ernst & Young resigned. These events raised further suspicions and presented the possibility that the company could be removed from the list from the Nasdaqwhich could harm its liquidity and make shares less attractive to institutional investors.
While Supermicro's stock price has fallen over the past few months, there has been some light at the end of the tunnel. Initially, the company found a new auditor (BDO USA). And on December 6, it received an extension from the Nasdaq, giving it until February 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 of $5.9 billion to $6 billion. While this is below previous guidance 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 such as Nvidia a Advanced Micro Deviceswhich saw their top lines increase by 94% and 17%respectively, in their most recent quarters. Supermicro's explosive momentum likely to continued due to its pick-and-shovel exposure to the AI opportunity.
Super Micro turns graphics processing units (GPUs) made by Nvidia and other chipmakers are ready-to-use computing 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 will likely boost demand for its servers as their technical advantages could make them essential items for companies wishing to remain competitive.