Super Micro Computer stock continues wild ride as investors weigh AI hype against alleged DOJ probe
Super Micro Computer ( SMCI ) stock fell 2.5% on Thursday after rising as much as 9% the day before, continuing its rollercoaster ride for a week as investors oscillate between optimism about the company’s strong financial position and caution about regulatory risks.
It is said that super micro is being done Investigation by the Ministry of Justice Due to allegations of questionable business practices outlined in the scathing criticism a report By short-selling firm Hindenburg Research in late August. This put pressure on the stock, which has been hovering under $50 per share ever since.
This week, SMCI shares rose on positive reports from the AI server maker. Super Micro stock rose 16% on Monday after the company released numbers showing strong demand for its products. The stock was up 12% on Thursday from the previous week.
Super Micro makes servers that use Nvidia’s NVDA AI chips for data centers that run AI software. The company said it Shipping servers with more than 100,000 Nvidia GPUs each quarter “For some of the largest AI factories ever built.”
Then on Tuesday, SMCI shares fell 5% after a promising pre-market rally that saw the stock rise as much as 7%. Futurum Group CEO Daniel Newman said investor euphoria over the company’s shipping data had faded against the backdrop of Super Micro’s regulatory risks.
“I think one piece of good news hardly cancels out several months of significant financial and regulatory scrutiny around a company like this,” Newman said.
The Hindenburg report in August accused SuperMicro of shoddy accounting, undisclosed ties between its CEO and companies it does business with, and violations of the US export embargo. For example, Hindenburg said SuperMicro shipped servers to sanctioned Russian companies through shell companies, and the military likely used some of them in its war against Ukraine.
The day after Hindenburg released its report, Super Micro shares fell 20%. The company also delayed filing its 10-K annual report with the U.S. Securities and Exchange Commission. Super Micro’s problems continued with a Wall Street Journal report on the alleged Justice Department investigation, sending shares tumbling in late September.
Super Micro CEO Charles Liang said the Hindenburg report contained “false or inaccurate statements” and “misleading representations of information we have previously shared publicly.” Liang said the company’s delayed 10-K filing will not impact the company’s fourth-quarter financial results, adding that Super Micro will address Hindenburg’s allegations “in a timely manner.”
Super Micro’s stock surge this week shows the tension between its potential as a major player in the AI boom and the regulatory hurdles it faces.
“This is a high-risk reward,” Newman said. “If they are vindicated of all this, there is a very good chance they will see a good move to the upside.” Of the Wall Street analysts tracked by Bloomberg who cover the stock, seven have a buy rating on the stock, while 11 maintain a hold rating. Only one analyst recommends selling the stock.
Analysts see shares rising to $66 over the next 12 months.
The company reported mixed results in its latest earnings report. Super Micro’s most recent quarterly revenue of $5.3 billion for the three months ended June 30 barely beat Wall Street expectations, but was 143% higher than a year earlier. On the other hand, Super Micro’s fiscal fourth-quarter earnings per share for the company of $0.63 were well below analysts’ expectations of $0.83, according to Bloomberg data.
Argus Research analyst Jim Kelleher told investors in an Oct. 3 note to buy the stock down, noting that Super Micro has “grown sales and profits much more quickly than the technology industry in recent years.” Wall Street expects SuperMicro to report revenue of $6.5 billion for the period ending September 30, up 206% from the previous year. The company has not yet confirmed a date for its next earnings release.
“At this point, we assume that any accounting irregularities, if they exist, are minor and can be addressed while financial documents need to be reissued,” Kelleher said, adding that Super Micro’s recent 10-for-1 stock split on Oct. 1 “expands the pool of potential investors and should To be positive in the long term.
Despite his long-term optimism, Kelleher lowered his 12-month price target on the stock from $100 to $70.
Laura Bratton is a reporter for Yahoo Finance.
Click here for the latest stock market news and in-depth analysis, including stock-moving events
Read the latest financial and business news from Yahoo Finance
Comments are closed, but trackbacks and pingbacks are open.