One man’s loss is another man’s gain, as the saying goes, and Super Micro Computer (SMCI) definitely has the loss part covered.
The San Jose, Calif., tech company has taken several lessons in learning the blues as its stock continues its downward trajectory.
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SMCI shares were down nearly 12% at last check and are off 24% this year.
Super Micro, which makes liquid-cooled artificial-intelligence servers, has been pummeled by a series of revelations dating back to August when Hindenburg Research accused the company of engaging in “accounting manipulation.”
The short-seller claimed in a report that it had “found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”
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“Tesla had been sourcing its servers exclusively from Super Micro,” Hindenburg said. “But recent reports in May 2024 and posts by (Tesla CEO) Elon Musk show Dell has now won major deals from Tesla, and Musk’s xAI, eroding Super Micro’s exclusivity.”
Michael Dell, chairman and CEO of Dell Technologies
Nvidia CEO praises Dell
Hindenburg also cited Nvidia (NVDA) CEO Jensen Huang’s endorsement of Dell Technologies (DELL) : “Nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.”
The AI-chip titan has been reportedly moving some of its Super Micro orders to other suppliers.
Related: Analysts revisit Dell, Super Micro stock price targets on AI capabilities
Hindenburg’s allegations also sparked a U.S. Department of Justice investigation into Super Micro, according to the Wall Street Journal.
Last month the Big 4 accounting firm Ernst & Young resigned as Super Micro’s auditors because it could “no longer provide the audit services in accordance with applicable law or professional obligations.”
Super Micro said it had formed an independent committee to investigate EY’s concerns, and on Nov. 5 the company said the three-month probe found that “the Audit Committee has acted independently and that there is no evidence of fraud or misconduct on the part of management or the Board of Directors.
“The Committee is recommending a series of remedial measures for the Company to strengthen its internal governance and oversight functions, and the Committee expects to deliver the full report on the completed work this week or next,” the statement said. “The Special Committee has other work that is ongoing but expects it to be completed soon.”
Super Micro said the committee did not provide any additional details or information outside of the statement.
In addition, the company said it was working “diligently on matters related to the [Securities and Exchange Commission] Form 10-K,” the annual report that was due Aug. 29, “but remains unable at this time to predict when the Form 10-K will be filed.”
On Sept. 20, Nasdaq gave Super Micro a 60-day deadline to either file the Form 10-K or to submit a plan to Nasdaq to regain compliance with the index’ listing rules.
Super Micro said that it intends “to take all necessary steps to achieve compliance with the Nasdaq continued listing requirements as soon as possible.”
The company also provided first-quarter guidance that came in below Wall Street’s expectations.
Analysts all over town have been slashing their price targets and lowering their ratings for Super Micro’s stock.
Dell and HPE in line for AI orders
On Nov. 6 Citi analyst Asiya Merchant suggested that Dell and to a lesser extent HP Enterprise (HPE) will likely benefit from improving artificial intelligence order momentum and competitive intensity in the quarters ahead, given Super Micro’s woes,” according to The Fly.
The analyst noted that Super Micro provided a business update below estimates, attributing the shortfall to a demand air pocket as its customers await Nvidia’s next-generation Blackwell chips, which are on allocation.
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Dell’s shares have been taking the high road in comparison with Super Micro’s downtown train.
The company’s stock is up roughly 79% year-to-date and up 85.3% from a year ago.
The provider of computer hardware and peripherals, which marked its 40th anniversary this year, is scheduled to report earnings on Nov. 26.
“Our AI momentum accelerated in Q2 and our results and outlook demonstrate that we are uniquely positioned to help customers leverage the benefits of artificial intelligence,” Jeffrey Clarke, the company’s chief operating officer, told analysts during the earnings call in August.
In September, Dell said that it was returning to the S&P 500. The Round Rock, Texas, company had been on the benchmark index previously before going private in 2013.
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Will Dell see massive benefit from Super Micro’s anguish?
Analysts at Morgan Stanley don’t quite see it that way.
The firm, which raised its price target on Dell Technologies to $154 from $136 and affirmed an overweight rating on the shares, said AI server momentum “remains strong.”
Morgan Stanley noted that the firm’s recent checks point to about $20 billion of AI-server revenue in fiscal 2026, which is 56% higher than its prior forecast.
The investment firm now estimates Dell will post $110 billion of revenue and $10.50 of earnings per share in fiscal 2026.
Those figures, respectively 5% and 12% above Wall Street’s consensus estimates, “don’t explicitly assume SMCI share gains,” Morgan Stanley said.
In a $40 billion AI-server fiscal 2026 “bull case,” the firm assumes Dell takes one-third of Super Micro Systems’ business through competitive wins.
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