Super Micro Computer Stock Plummets, Dragging Down AI Hardware Sector

Why Super Micro Computer Stock Plunged Today | The Motley Fool

Super Micro Computer stock is crashing over accounting concerns. Super Micro Computer (SMCI -24.71%) had been one of the high-flying tech stocks this year. But the maker of servers, cooling systems, and storage system components for the massive data center market has run into some headwinds. Today, the company said it would need to delay its 10-K filing for its fiscal 2024 year ended June 30. The company previously reported results for its fourth quarter and fiscal year on Aug. 6. It noted it has not made any updates to those results. But investors are selling on the news today with the stock crashing 24.6% as of 10:45 a.m. ET. Concern over the announcement is heightened today after a short-seller report was also released yesterday. Yesterday Hindenburg Research said it held a short position in Supermicro stock after a three-month investigation into Supermicro found accounting concerns as well as "sanctions and export control failures." Management hasn't responded to Hindenburg's allegations. And the 10-K filing delay may not be related to the timing of the short-seller report. But investors hate uncertainty -- especially when it comes to financial accounting. After more than tripling at one point during the year, Supermicro shares are now higher by about 45% year to date. The move higher came as the buildout to expand artificial intelligence (AI) computing capacity helped Supermicro more than double net sales year over year in its fiscal 2024. But at the same time, its gross margin has been declining throughout the year as competition increases. Now investors have to wait for more from the company to see if its previously reported financial data can even be relied upon. For those waiting for the stock to decline, this is probably not the time to jump in. Investors now need more clarity on the situation. Today's knee-jerk reaction to sell may also not be the right approach, as there will be more details available to make those buy or sell decisions in the near future.

Why Super Micro Computer (SMCI) Stock Is Getting Hammered - Super Micro Computer (NASDAQ:SMCI)

Super Micro Computer shares are trading lower by 19% Wednesday morning. Super Micro Computer Inc SMCI shares are trading lower by 23.7% to $418.06 Wednesday morning after the company announced that it will delay its Form 10-K filing. What Happened: Super Micro Computer announced early Wednesday that it will not file its Annual Report for the fiscal year ending June 30, 2024, on time. The company plans to file a Notification of Late Filing on August 30, 2024. The company says the delay is due to the need for more time to complete an assessment of its internal controls over financial reporting. SMCI has not updated the financial results it previously announced on August 6, 2024. Short Report: Hindenburg Research this week issued a short report accusing Super Micro Computer of accounting manipulation, sibling self-dealing and sanctions evasion, raising concerns about the company's rapid growth in the AI sector. The report cites past SEC charges, allegations of continued unethical practices, and undisclosed business ties with companies linked to CEO Charles Liang's family. Additionally, the report highlights growing competition from companies like Dell and Amazon, which could challenge Super Micro's market position...Read More What Else: The broader semiconductor industry is bracing for NVIDIA Corp's highly anticipated second-quarter earnings report, due after the market closes on Wednesday. The outcome of Nvidia's results could have significant implications across the sector, driving market sentiment and influencing stock movements. Read Also: Will Nvidia Continue To Deliver? Investors Sweat Over Hyped-up Expectations And Potential Blackwell Delay Ahead Of Q2 Report How To Buy SMCI Stock Besides going to a brokerage platform to purchase a share - or fractional share - of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument. For example, in Super Micro Computer's case, it is in the Information Technology sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment. According to data from Benzinga Pro, SOFI has a 52-week high of $1,229.00 and a 52-week low of $226.59. Market News and Data brought to you by Benzinga APIs

Super Micro's plummet leads several other AI hardware stocks down as well

While Super Micro Computer (NASDAQ:SMCI) led Wednesday's free fall, several other companies integral to the artificial intelligence hardware market slipped as well. Super Micro plummeted 25% by noon trading, following news the company will delay its annual 10-K report to the U.S. Securities and Exchange Commission. This came one day after Hindenburg Research issued a harsh indictment on the overall state of the server company. Barclays analysts discussed the issue with Super Micro management this morning. "Management believes that the fundamental business remains strong and that they just need more time to assess internal controls and governance," said Barclays analysts George Wang and Tim Long, in an investor note. "Management says SMCI is fully in compliance with export controls." Still, Barclays believes it might take several months or longer before Super Micro can regain investors' trust. "It is likely a show-me story for margin trends as investors want more proof points of margin improvement," Wang said. "While component constraints and expedite fees should largely get alleviated by Dec-Q, competitive pricing trends should take a bit longer to normalize in our view as we think SMCI has been giving away DLC racks for free (priced as air-cooled racks) to win large orders with Musk entities." Several other big name AI stocks slid Wednesday as well. Arm Holdings (NASDAQ:ARM) was down 6%. Arm has dropped about 33% this summer after hitting an all-time high of $186 in early July. Arm has only been publicly traded since last September.

Super Micro Computer Stock Is Plummeting Today -- Is This a Buying Opportunity Ahead of Its Stock Split?

Hindenburg Research published a short report on Supermicro yesterday, alleging that the company was a serial offender when it came to bad accounting practices. Unfortunately, the server-hardware specialist seems to have almost immediately lent credence to some of the criticisms in the bearish report. In a press release published this morning, the company announced that it would be delaying the filing of its annual 10-K report with the Securities and Exchange Commission (SEC) for the fiscal year ended June 30. News that the financial filing is being postponed so that Supermicro can "complete its assessment of the design and operating effectiveness of its internal controls over financial reporting" is spurring big sell-offs for the stock today. But even with today's pullback, the artificial intelligence (AI) stock is still up 41% year to date -- and it's heading for a stock split on Oct. 1. Is it time to buy Supermicro stock? Supermicro stock was already a high-risk, high-reward investment play. With the news the company will be delaying its 10-K report, the outlook has become even more speculative. In addition to news that Supermicro's annual filing with the SEC will be delayed, the release of Nvidia's much-anticipated second-quarter results later today could be another major source of volatility. With so much uncertainty on the horizon, it's not surprising that investors are feeling skittish about Supermicro stock. But today's pullback could be a worthwhile buying opportunity for risk-tolerant investors. In the press release, Supermicro said that it had not made changes to the quarterly and full-year results that it published on Aug. 6. It's still possible that the company will wind up making performance revisions, but the market may be overreacting due to news of the delayed filing coming so soon after Hindenburg published its critical report. With signs that demand for AI-tailored servers and other hardware remains very strong, treating today's big pullback as a pre-stock-split buying opportunity could be a good move for risk-tolerant investors.