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Super Micro Computer stock (SMCI) started 2024 reaping the rewards of an artificial intelligence darling. But the year turned out to be a bust.
Shares of the AI server maker were on track to notch a yearly gain of just 6% on Tuesday afternoon — far less than other AI-themed stocks that have thrived in the bull market in 2024. And despite turning positive for the year in December, Super Micro shares remained far below their highs near $120 in mid-March.
Super Micro makes specialized computer servers with Nvidia’s (NVDA) chips that are used in data centers to power artificial intelligence software. Its stock has soared in the past couple of years thanks to booming demand for computing hardware (including its servers) from tech companies looking to build out their artificial intelligence infrastructure. The stock jumped 87% in 2022 and another 246% in 2023, soaring to an all-time high of $118 in early 2024 ahead of its milestone addition to the S&P 500 on March 18.
But shares began to see signs of volatility soon after as the company struggled to meet analysts’ and investors’ high expectations earlier this year. The stock’s performance became increasingly unstable in the latter half of 2024 as Super Micro grappled with the fallout from a report published by short-selling firm Hindenburg Research, accusing the server maker of accounting violations, violations of export controls, and questionable relationships between its executives and key suppliers. The company now faces the risk of being delisted from the Nasdaq and, reportedly, an investigation of its accounting practices by the Department of Justice.
Super Micro CEO Charles Liang said in a Sept. 3 letter to customers that the Hindenburg report contained “false or inaccurate statements” and “misleading presentations of information that we have previously shared publicly.”
Super Micro stock has posted both major gains and steep losses as it contends with obstacles in the wake of the Hindenburg report. On Aug. 28, the day after the report was released, Super Micro said it would delay filing its annual report for its fiscal year that ended June 30, sending shares tumbling roughly 20% the day after its release.
The stock then came under pressure in early September as Barclays and JPMorgan downgraded SMCI to a Neutral rating. The server maker’s accountant, Ernst & Young, resigned on Oct. 30, saying it could “no longer be able to rely on management’s and the Audit Committee’s representations” and that it was “unwilling to be associated with the financial statements prepared by management.” EY’s resignation sent the stock tumbling 32% in a single day.
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