Is Super Micro Computer Stock Finally Out of the Woods?

At the beginning of last year, Super Micro Computer (SMCI) emerged as a significant player in the artificial intelligence (AI) sector. Its stock surged by an impressive 188% during the first half of the year as a growing number of customers turned to the company for essential equipment like servers and workstations, which are critical for AI data centers. The company also saw its earnings rise, achieving quarterly revenues that were previously what it would report over an entire year.

However, this positive trend was interrupted by concerns surrounding Supermicro's accounting practices. The situation escalated when Hindenburg Research published a short report raising alarm over potential accounting issues. Following this, Supermicro itself postponed the release of its 10-K annual report and 10-Q quarterly report, both of which are required to be audited and filed with the Securities and Exchange Commission. This delay put the company at risk of being delisted from Nasdaq.

Compounding the challenges, Supermicro's auditor resigned, creating yet another obstacle in the company’s efforts to produce its audited financial statements.

These events negatively impacted the stock, leading to a decline of around 30% from the time the short report was released in August until the market closed on February 11.

Despite these setbacks, Supermicro is taking measures to get back on track. Recently, the company shared its latest unaudited financial figures and expressed optimism about its growth trajectory for the current fiscal year. So, the question remains: is Supermicro's stock finally out of the woods?

Supermicro's Successes and Challenges

To better understand the company’s current situation, it's important to look at its successes and hurdles over the past year. Founded over 30 years ago, Supermicro has recently experienced significant revenue growth fueled by the AI boom. Customers are looking for complete rack-scale solutions for their data centers, and Supermicro has established itself as a fast and efficient provider of customized equipment.

Part of what enables Supermicro to do this is its innovative building blocks technology, which utilizes many interchangeable parts. This design allows the company to quickly assemble tailored solutions for its clients. Additionally, Supermicro collaborates closely with leading chip designers, which helps it integrate the latest technologies into its products right away.

This ability allowed Supermicro to achieve its first $3 billion quarter early last year, reaching figures that represented an entire year’s worth of revenue just two years prior, in 2021.

Nonetheless, the company faced challenges regarding its financial reporting. In response, Supermicro appointed a new auditor to assist in filing necessary documentation, and it confirmed that these filings would be made by the February 25 deadline set by Nasdaq. An independent committee also reviewed the company’s operations and found no evidence of wrongdoing or fraud, although it recommended adding more executives to bolster management as the company expands. They also stated that Supermicro does not foresee needing to restate its financials when it files the 10-K and quarterly figures on February 25.

Supermicro Lowers Guidance

In a preliminary second-quarter 2025 earnings report released recently, Supermicro provided insights into its current performance. The delays in financial reporting and investments in research and development have impacted its margins, leading to a gross margin of only 11.9% on a non-GAAP basis for the quarter. Furthermore, the company adjusted its revenue guidance for the fiscal year down to between $23.5 billion and $25 billion, a decrease from its earlier prediction of $26 billion to $30 billion. However, Supermicro remains optimistic about achieving $40 billion in revenue for the fiscal year 2026.

Looking ahead, Supermicro's ability to deliver products integrated with Nvidia's new Blackwell chips and its expertise in direct liquid cooling technology are expected to support further growth in the coming quarters.

A Key Date Ahead

Returning to our original question: is Supermicro finally out of the woods? The answer might be "almost." A critical date is approaching: February 25, the deadline for filing the company’s audited reports.

Although Supermicro does not anticipate any restatements, it is crucial to determine if the company can meet this filing deadline and to review the content of those reports. If everything checks out positively, this may signal that the previously troubled stock is indeed on a path to recovery.

Supermicro, Stock, AI