The year 2024 was a roller coaster ride for the investors of Super Micro Computer (SMCI), a provider of servers, storage systems, and software. The stock has plunged about 63% due to accounting fraud accusations, the resignation of Ernst & Young as the auditor, and the delay in the filing of financial reports. While investors welcomed the appointment of a new auditor and the company’s assurance about filing its delayed financial reports by February 25, Wall Street remains cautious about the stock’s prospects in 2025 due to the uncertainties involved.
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SMCI Stock’s Volatile Journey in 2024
Super Micro stock touched a 52-week high of $122.90 in March 2024 amid optimism about the demand for its servers powered by artificial intelligence (AI) processors. The company is seen as a major beneficiary of the AI boom and gained popularity due to its partnership with semiconductor giant Nvidia (NVDA).
However, SMCI stock plunged to a low of $17.25 in November 2024 due to continued concerns over accounting irregularities and delayed filing of financial reports. Notably, in August 2024, short seller Hindenburg Research accused the company of accounting manipulation and undisclosed related party transactions. Earlier this month, the company triggered a rally in its stock after announcing that an independent special committee found no evidence of misconduct and that no restatement of its quarterly reports is expected.
However, the stock took a hit on the announcement of SMCI’s exit from the Nasdaq 100 Index (NDX), effective December 23, as part of the index’s rebalancing. Meanwhile, the company has time until February 25 to file its delayed annual report to regain compliance with Nasdaq’s listing requirements.
Analysts Remain Skeptical Due to Ongoing Uncertainties
Analysts remain skeptical about SMCI stock due to multiple uncertainties, including the timely filing of financial reports and continued listing on Nasdaq. In December, analysts at Goldman Sachs and Wedbush reiterated a Hold rating on Super Micro stock.
Meanwhile, JPMorgan analyst Samik Chatterjee reiterated a Sell rating on SMCI stock with a price target of $23 following a meeting with the management. The analyst noted that despite market speculation about SMCI’s customers moving orders to other vendors, management reassured investors that the company’s customer base remains solid, with no major signs of any shifts.
Further, management expressed confidence about SMCI’s ability to meet customers’ orders, with the company poised to introduce new products in the second half of Fiscal 2025. However, the analyst remains bearish on the stock, awaiting better prospects following the recent chaos around the company’s accounting practices.
Is SMCI a Good Stock to Buy Now?
Overall, Wall Street has a Hold consensus rating on Super Micro Computer stock based on two Buys, five Holds, and two Sells. The average SMCI stock price target of $38.57 implies about 26% upside potential.
Conclusion
Most analysts covering SMCI have a cautious stance on the stock following several months of distraction caused by accusations of accounting irregularities. While the demand for the company’s products amid the AI boom seems attractive, Wall Street and investors keenly await the timely filing of the company’s financial reports, which is crucial for its continued listing on the Nasdaq.
