More Wall Street analysts downgraded or pulled their investment ratings on Super Micro Computer stock after the beleaguered company's business update.
The San Jose, Calif.-based company late Tuesday cut its sales targets for the September and December quarters "despite a white-hot AI server market where demand well exceeds supply," Mizuho Securities trading desk analyst Jordan Klein said in a client note Wednesday.
The data center hardware specialist blamed a shortage of Nvidia's latest AI processors, called Blackwell, for the guide down.
"But I would assume SMCI would have known the Nvidia Blackwell volume ramp schedule 90 days ago when they guided," Klein said. "And Blackwell volumes are expected to ramp quickly even in (Super Micro's) December quarter, so why the revenue miss?"
Mizuho Securities equity analyst Vijay Rakesh on Wednesday suspended coverage of Super Micro stock. He previously had a neutral rating on SMCI stock.
On the stock market today, Super Micro stock plunged 18.1% to close at 22.70.
SMCI stock is down 54% in the past three months and 20% year to date.
"Due to lack of full financial detailed and audited statements, we are suspending our rating and price target for SMCI," Rakesh said in a client note.
He added, "While SMCI is growing its top line 100%+ year over year as an AI leader positioned to ramp on Nvidia Blackwell, near term there are uncertainties with (the) Nov. 16 Nasdaq approval and audited 10-K filing."
'Working With Urgency' To Fix Reporting
Last week, Super Micro disclosed that Ernst & Young had resigned as its accounting firm after citing concerns about the company's financial reporting. That news was on top of a delay in filing its annual 10-K report and a possible investigation by the U.S. Department of Justice.
Super Micro faces a Nov. 16 deadline to file with Nasdaq a plan to return to compliance with its financial reporting. SMCI stock could be delisted from the exchange if it fails to meet Nasdaq's requirements.
On a conference call with analysts, Super Micro Chief Executive Charles Liang said he remains confident in the company's previous financial reports. The company is actively working to hire a new auditor, he said.
"We are working with urgency to become current again with our financial reporting," Liang said.
He added, "We do not believe the current challenges affect Super Micro's ability to service our customers and partners as we continue to grow rapidly and strongly with the AI revolution."
Super Micro Stock Downgraded To Sell
JPMorgan analyst Samik Chatterjee on Wednesday downgraded Super Micro stock to underweight, or sell, from neutral. He also slashed his price target to 23 from 50.
Chatterjee cited increasing risk factors and uncertainty for his downgrade.
The company failed to provide information on Ernst & Young's issues with the company, Chatterjee said. It also didn't disclose what remedial measures it plans to take to improve its internal governance and oversight functions, he said.
Super Micro also faces the risk of customers shifting their business to rivals such as Dell Technologies, he said.
Meanwhile, several other Wall Street firms cut their price targets on Super Micro stock on Wednesday. They included Barclays, Loop Capital, Goldman Sachs, Susquehanna and Wedbush Securities.
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