With shares falling a staggering 71% from an all-time high of $119 hit in March, super microcomputer (NASDAQ:SMCI) trades at a substantial discount from its peak. Shares are reeling following allegations related to the company’s accounting practices and other challenges.
However, despite the bad press, Supermicro’s business continues to boom amid growing demand related to artificial intelligence (AI). Will this be enough to save the stock? Let’s dive in 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 organization Hindenburg Research published a report accusing the computer hardware maker of accounting manipulation, self-dealing and evasion of sanctions related to the Russian invasion of Ukraine.
The next day, Supermicro announced that it would delay the filing of its fourth quarter report, citing the need to evaluate the effectiveness of its internal controls. Shortly after, its auditor Ernst & Young resigned. These events further increased suspicions and introduced the possibility that the company could be removed from the list of Nasdaqwhich could harm its liquidity and make the stock less attractive to institutional investors.
While Supermicro’s share price has plummeted in recent months, there has been some light at the end of the tunnel. To start, the company found a new auditor (BDO USA). And on December 6, it received an extension from Nasdaq, which gave it until February 25 to submit its delayed annual reports. Meanwhile, business still appears 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 to be between $5.9 billion and $6 billion. While this is below 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 Microdeviceswhich saw its income grow by 94% and 17%respectively, in its most recently reported quarters. Supermicro’s explosive momentum it is likely that continue due to their exposure to the AI opportunity.
Super micro laps graphics processing units (GPUs) made by Nvidia and other chipmakers in turnkey 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 increase demand for their servers because their technical advantages could make them must-haves for businesses that want to remain competitive.