Chipmaker Nvidia (NVDA) is moving orders away from AI hardware company Super Micro Computer (SMCI) to other suppliers to minimize disruption in the AI server industry, as reported by DigiTimes. As a result, companies like Gigabyte and ASRock are stepping in and benefiting from new orders, with Gigabyte scaling up production to meet Nvidia’s needs. However, Super Micro’s problems are impacting suppliers like Leadtek, Auras Technology, and Argosy Research, who are dealing with fewer orders.
Unsurprisingly, Super Micro’s stock saw a massive 45% drop last week after its auditor resigned, which increased fears of a potential delisting due to its delayed financial statements. In fact, the company has until November 20 to file.
SMCI stock has been struggling ever since short-seller Hindenburg Research released a report accusing the company of financial fraud, which subsequently led to Super Micro delaying its annual filing. Although the firm claimed there wouldn’t be big changes to its 2024 numbers, it was not enough to satisfy investors.
Wedbush Remains Skeptical about SMCI
In addition, it appears that Wall Street analysts are not satisfied either. Wedbush analysts Matt Bryson and Antoine Legault remain skeptical about SMCI’s claims and have slashed their price target on the stock from $62 to $32 while keeping a Neutral rating. Indeed, Wedbush thinks that deeper issues might be lurking, as Bryson pointed out that even before this financial drama, there were signs that demand for liquid-cooled servers wasn’t as strong as the company had projected.
It’s worth noting that Bryson is a five-star analyst who, so far, has enjoyed a 70% success rate on his stock ratings, with an average return of 32.4% per rating.
Is SMCI Stock a Good Buy?
Overall, analysts have a Hold consensus rating on SMCI stock based on three Buys, nine Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 6% year-to-date decline, the average SMCI price target of $64.49 per share implies 140.81% upside potential.
