Super Micro Computer (SMCI, Financial), once a rising star in the AI server market and recently added to the S&P 500 Index, is facing significant challenges. Following a sharp drop of 32.68%, the stock experienced further declines of over 10% amid broader technology stock downturns, reaching as low as $27.22. This dramatic fall erased its maximum 332% gains earlier this year and wiped out over $50 billion in market value, affecting investors globally.
The company, which emerged as a beneficiary of the AI investment boom sparked by ChatGPT in 2022, is now under scrutiny. Despite revenue doubling in the past three quarters, Super Micro Computer faces an audit crisis that saw its auditor, Ernst & Young, resign, citing a lack of trust in the company's financial statements. The resignation occurred before completing its first-year audit after taking over from Deloitte.
The Nasdaq exchange has warned Super Micro Computer to comply with filing requirements by mid-November or face delisting, echoing a similar situation the company faced in 2018. Concerns have been raised by analysts, including Wedbush, about the company's ability to resolve these issues in time to avoid delisting.
Super Micro Computer plans to release its fiscal 2025 Q1 report on November 5, amidst these challenges, in a bid to reassure the market. Critics have also targeted S&P Global for including such a volatile stock in their index, which has since suffered significant losses compared to the stock it replaced. S&P Global maintains general rules for inclusion but reiterates its ability to make unscheduled changes in response to market developments.
