Data center operators appear to be sticking with Super Micro Computer as the AI server maker deals with issues related to its accounting and financial reporting. Meanwhile, many investors are giving up on SMCI stock.
In a client note Tuesday, JPMorgan analyst Samik Chatterjee said Supermicro's business remains "robust" and that customers are staying put. Chatterjee met with Supermicro executives on a recent visit to the company's headquarters in San Jose, Calif.
"Despite market speculation about customers moving orders to other vendors, management reassured investors that its customer base remains strong, with no significant signs of changes to order allocations," Chatterjee said.
He added, "The company is confident in its ability to service orders and is gearing up for new product rollouts in second-half fiscal 2025 and early fiscal 2026."
Also, Supermicro said it is on track to ramp production at its new plant in Malaysia in the first half of calendar 2025, Chatterjee said.
However, Chatterjee rates SMCI stock as underweight, or sell, with a price target of 23.
SMCI Stock Drops
On the stock market today, SMCI stock dropped 8.2% to close at 40.54.
Supermicro stock hit a split-adjusted record high of 122.90 on March 8, driven by excitement about supplying servers for artificial intelligence applications.
Late Friday, Supermicro announced that the Nasdaq stock exchange granted its request for an extension for submitting key filings. The server maker, an Nvidia partner, now has until Feb. 25 to file its 10-K annual report for the fiscal year ended June 30 as well as the 10-Q report for the quarter ended Sept. 30.
On Aug. 27, Supermicro shares tumbled after short seller Hindenburg Research accused the company of accounting manipulation, export control failures, customer issues and other problems. The next day, Supermicro announced that it was delaying the filing of its annual report on form 10-K with the U.S. Securities and Exchange Commission.
On Oct. 30, Supermicro revealed in a regulatory filing that its accounting firm, Ernst & Young, had resigned over financial reporting concerns. On Nov. 18, the company said it hired BDO USA as its new independent auditor.
In a positive development, Supermicro announced on Dec. 2 that an independent special committee found no accounting wrongdoing at the company. SMCI stock jumped nearly 29% to 42 on the news.
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