The talk currently buffeting the AI industry is centered around DeepSeek’s AI chatbot, which reportedly provides similar results to existing models while using significantly less computer power. Shares of companies working to build and support the hardware for the AI revolution, including Super Micro Computer (NASDAQ:SMCI) dropped after the news broke.
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Of course, SMCI has had other headaches to worry about over the past few months. Allegations of accounting irregularities, a missed 10-K filing, and a very public break-up with its accounting firm have dampened investor enthusiasm for the company. All told SMCI has dropped almost 60% over the past six months.
At present, SMCI has a hard and fast deadline approaching on February 25, by which time the company must submit its audited financials in order to remain listed on the Nasdaq stock exchange.
Investor Bashar Issa believes this poses an interesting opening for those willing to take a chance on the embattled company.
“I see it as a very opportunistic speculative investment opportunity created by an overly pessimistic, and perhaps, overly prudent investment crowd adopting the same absolute, principled doctrine,” suggests the investor.
Issa explains that he has overall confidence in SMCI’s ability to meet the February deadline, citing evidence that the company has stuck to its compliance plan after the departure of its previous auditor.
“This consistency and reliability have created multiple catalysts as the company executed its multistep plan to regain compliance,” Issa continues.
The investor therefore believes that a “sharp” relief rally will commence following a successful submission, one that might even prop shares up to pre-crisis levels. However, the investor cautions that this might be short-lived, as the market will shortly thereafter refocus its attention on underlying issues, such as market share erosion and problems with cash management.
“While risky, SMCI’s consistent progress on compliance milestones presents a unique speculative trading opportunity for short-term gains amid market pessimism,” states Issa, who is upgrading SMCI to a Strong Buy. (To watch Issa’s track record, click here)
Wall Street, as a whole, is content to wait-and-see where the chips fall surrounding the submission deadline at the end of February. With 1 Buy, 5 Hold, and 2 Sell ratings, SMCI holds a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $28.58 implies minimal movement going forward. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
