Super Micro Computer Inc (NASDAQ: SMCI) may succeed in avoiding a delisting as it submits a plan for its delayed annual report on Monday.
But the company’s financial and legal woes are far from over.
Reports have emerged that Nvidia and YTL Corp have decided to switch from SMCI to more stable suppliers.
Still, Supermicro stock is up nearly 15% this morning as investors bet on it avoiding a delisting on Monday.
Supermicro is losing business
Nvidia has reportedly started redirecting orders from Super Micro Computer to other suppliers.
The AI server company had to rescind plans to set up a new factory in Malaysia amidst allegations of financial malpractice and Ernst & Young’s refusal to continue as its auditor.
That reportedly made Kuala Lumpur-headquartered YTL Corp. “transfer orders for Nvidia GB200 NVL72 AI servers to Taiwan’s Wiwynn, noting the original order was for a super large AI data centre.”
Note that the new facility in Malaysia could have helped SMCI produce 10,000 server cabinets per month – about double its production capacity at writing.
Once touted as one of the biggest beneficiaries of artificial intelligence, Supermicro stock is currently down some 70% versus its year-to-date high in March.
Cisco could weigh on Supermicro stock
Making life even more difficult for Super Micro Computer is Cisco Systems Inc.
On its earnings call last week, the communications technology company said it’s expanding its footprint in artificial intelligence with data center servers equipped with Nvidia chips.
“Cisco is well positioned when enterprises refresh IT infrastructure and embrace their own AI initiatives,” as per Raymond James analyst Simon Leopold – and SMCI could take a further hit as CSCO continues to penetrate the enterprise market with artificial intelligence servers.
Plus, Supermicro stock doesn’t currently pay a dividend either to appear any more attractive at least for the income investors.
Are SMCI shares worth owning?
The aforementioned struggles make Super Micro Computer a “super” risky investment in writing.
Susquehanna analyst Mehdi Hosseini reiterated his negative rating on the company this month and warned of a further downside in its share price to $15. SMCI is currently going for a little over $20.
Earlier in November, the Nasdaq-listed firm reported $5.9 billion to $6.0 billion in revenue (unaudited) for its first financial quarter – well below $6.44 billion that analysts had forecast.
SMCI withdrew its full-year guidance at the time as well. “Despite a lack of detailed financial statement and inability to file with SEC, the updated estimates should still help investors,” Hosseini told clients in his research note.
Note that Supermicro stock was trading at a high of close to $120 just months ago.
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