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Hardware producer Super Micro Computer Inc. (NASDAQ:SMCI) has seen its stock plummet 60% since joining the S&P 500.
The company’s woes deepened after a recent downgrade from Barclays. Super Micro, which makes servers and motherboards, now faces mounting concerns around margins, internal controls, and competitive positioning in the rapidly growing AI sector.
Last month, short-seller Hindenburg Research accused Super Micro of “accounting manipulation,” causing the stock to drop as much as 26%. Since then, it hasn't recovered much.
Super Micro’s market cap went from $35 billion to, at last check Thursday, $24 billion.
Barclays added to the pressure, downgrading the stock from Overweight to Equal Weight Wednesday, cutting the price target from $693 to $438. The downgrade was driven by concerns over “weak AI server margins”, “customer erosion”, and uncertainty over future orders tied to Nvidia Corp‘s (NASDAQ:NVDA) GB200 system.
Analyst George Wang said the company's “weaker competitive positioning in GB200 era” and “a lack of transparency with investors has been one of the pushbacks for the SMCI story.”
Super Micro’s delaying the filing of its 10-K report has further amplified these concerns, raising questions about Super Micro’s governance and internal controls. Although the company has shown strong year-over-year revenue growth, investors are cautious due to these underlying risks.
While there's still a bullish case for long-term AI growth, the current risk/reward profile for the company appears balanced.
With the stock continuing to struggle post-S&P 500 inclusion, Super Micro faces significant hurdles in regaining investor trust.
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