Super Micro's Stock Tumbles as Revenue Misses Mark Amid Nvidia Supply Strains and Financial Scrutiny

Super Micro Computer (SMCI) has once again found itself under pressure as its stock prices plummeted following the release of its preliminary financial data for the first fiscal quarter of 2025, which ended on September 30, 2024. Despite an initial 6.42% rise during regular trading hours, the company's share price took a nosedive of 15.88% in after-hours trading. Compared to its peak in March this year, the stock has fallen a staggering 80%, from a high of $122.9 to the after-hours price of $23.3.

The company's financials revealed a substantial year-over-year revenue growth between 178.3% to 183%, with net sales reaching approximately $59 billion to $60 billion, yet missing analyst expectations of $64.7 billion. The adjusted earnings per share (EPS) were reported at $0.75 to $0.76, marginally surpassing the anticipated $0.74. However, the company's gross margin, a critical figure for investors, rose by 2.1 points to 13.3% from the previous quarter but declined by 3.4 points compared to last year.

For the fourth quarter, SMCI’s outlook fell short of market predictions, with projected net sales of $55 billion to $61 billion and adjusted EPS anticipated in the range of $0.56 to $0.65, below the forecasted $67.9 billion and $0.83, respectively. CEO Charles Liang noted that the revenue shortfall was partly due to constrained Nvidia chip supplies, indicating a deeper issue since Nvidia recently announced the sell-out of its new Blackwell chips, with additional availability not expected until late 2025.

In recent years, SMCI has been closely tied with Nvidia, both benefiting significantly from the AI boom. However, Nvidia is reportedly seeking to dilute this dependency by reallocating its orders to other clients, amidst investigations into SMCI’s financial practices by U.S. authorities. This shift in order distribution has already benefitted competitors like GIGABYTE and ASRock, who are ramping up production capabilities in anticipation of their increased roles in Nvidia’s supply chain.

The situation has been exacerbated by the resignation of SMCI's auditing firm, Ernst & Young, which expressed concerns over financial accuracy, resulting in delayed annual reports. This has led to heightened scrutiny and fears of a possible delisting as SMCI faces potential penalties if proper filings are not completed by November 20.

These developments come on the heels of negative reports and short-selling activities targeting SMCI, casting doubts over its financial viability and strategic direction. The broader impact of these issues includes potential ripples throughout associated companies, such as those founded by CEO Liang’s siblings. As the market watches closely, stakeholders are urging caution and preparing for any further disruptions in this volatile scenario.