Super Micro Computer cools off on delisting concerns, wants to rack up AI business

Welcome to Stock Takes, my thrice-monthly take on an individual stock. I look at the big picture, unlike Wall Street analysts who are geared to earnings, and the media that focuses more on news value.

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Shares of Super Micro Computer, Inc. (NASDAQ:SMCI) have been on a wild ride in the last year, as the company faced the risk of delisting from the NASDAQ stock exchange after it did not file three financial reports with the Securities and Exchange Commission. On March 5, 2024, the stock closed at about $96 and a year later, this March 5, it was changing hands at about $39. The company dodged a bullet and avoided the threat of delisting; it fulfilled its public listing requirements by belatedly getting in its quarterly reports for the first and second quarters of its fiscal 2025, as well as its annual report for its fiscal 2024, by a February 25 deadline. However, it also faces other risks.

Founded in 1993 by its Chief Executive Officer Charles Liang, the San Jose, Calif.-based company manufactures server and storage systems mostly, as well as related subsystems and accessories (such as networking devices and security software) that target business and AI data centers, cloud service providers, and edge computing. The company also provides support services, such as liquid-cooling solutions, to help customers install and maintain their computer infrastructure. It describes itself as a turn-key provider of “total IT solutions which address demanding workloads from the enterprise and cloud to the intelligent edge,” delivering “rack-scale solutions optimized for various workloads, including artificial intelligence and high-performance computing where acceleration is critical.”

The company came out with an initial public offering (IPO) in 2007, pricing its stock at $8, now adjusted to about $0.90 after taking into account a 10-for-1 stock split the company did in 2024. This means IPO investors have now reaped about a 4000% return on their initial investment, which handily beats the NASDAQ Composite index. Not only that, the stock was added to the S&P 500 index in 2024. While all this sounds appealing, and there seem to be more prospects for growth, it’s not clear if the company will continue to rack up growth and reward investors, considering the delisting issue (it is not clear if the accounting concerns about the company’s internal control matters have been resolved) and a short-seller attack last year, among other risks. More recently, Trump Administration policies could impact the company.