Early last year, Super Micro Computer (SMCI 1.89%) was one of the biggest artificial intelligence (AI) winners. The stock soared 188% in the first half as customers rushed to the equipment maker for servers, workstations, and other elements crucial to AI data centers. Earnings were on the rise, with quarterly revenue reaching levels the company used to deliver in a full year.
However, questions about Supermicro's accounting practices interrupted the momentum. This started with a Hindenburg Research short report alleging accounting red flags -- and then Supermicro itself delayed the reporting of both its 10-K annual report and a 10-Q quarterly report. These are audited financial reports that publicly traded companies must file with the Securities and Exchange Commission. The delay put the company at risk for a Nasdaq delisting.
To make matters worse, Supermicro's auditor resigned, representing another roadblock along the path to filing audited financial reports.
All this has weighed on the stock, resulting in a decline of 30% from the release of the short report in August of last year to the close of trading on Feb. 11.
Supermicro has taken steps to put everything back on track, though, and this week, as it reported its latest unaudited financial figures, even said the growth trajectory for this fiscal year "remains promising." Is Supermicro stock finally out of the woods? Let's find out.
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Supermicro's successes and challenges
First, let's consider some background information, including Supermicro's successes and challenges over the past year or so. The company is more than 30 years old, but revenue truly took off in recent times along with the AI boom. Customers needed full-rack scale solutions for their data centers, and Supermicro is an expert at speedily delivering customized equipment.
Supermicro can do this thanks to its building blocks technology -- its equipment has many common parts, making it easy to quickly assemble items tailored to the needs of specific customers. On top of this, Supermicro works hand in hand with the world's biggest chip designers, allowing it to immediately include their innovations in its equipment.
All this helped Supermicro to reach its first $3 billion quarter early last year -- a level that represented full-year revenue as recently as in 2021.
But as mentioned, Supermicro hit a stumbling block as questions about its financial reporting arose. Since though, the company has taken steps to address the issues. It hired a new auditor that set to work on the financial filings -- and Supermicro confirmed these reports would be filed by the Feb. 25 deadline Nasdaq set to maintain the company's listing.
An independent committee also completed a review of Supermicro and found no signs of wrongdoing or fraud -- findings mainly called for the appointment of additional executives to strengthen the management team as the company grows. Finally, Supermicro confirmed that it doesn't expect a restatement of financials when it files the 10-K and quarterly figures on Feb. 25.
Supermicro lowers guidance
And, in a preliminary second-quarter 2025 earnings report this week, Supermicro gave us a glimpse into the latest trends. The financial reporting delays, along with research and development investments, have weighed on margins in recent times -- for the quarter, gross margin on a non-GAAP basis (generally accepted accounting principles) was 11.9%. And for the fiscal year, Supermicro has lowered its revenue guidance to the range of $23.5 billion to $25 billion from the earlier forecast of $26 billion to $30 billion. But the company remains confident about the possibility of reaching $40 billion for fiscal year 2026.
In coming quarters, Supermicro's delivery of products equipped with Nvidia's new Blackwell chips and Supermicro's strengths in direct liquid cooling technology should help drive growth.
A key date ahead
Now, let's get back to our question: Is Supermicro finally out of the woods? I would say "almost." One key date is just around the corner, and cautious investors should wait until that point before deciding on whether to buy Supermicro stock. I'm talking about Feb. 25, the deadline for the filing of the company's audited reports.
Though Supermicro doesn't expect restatements, it's important to see whether the company will follow through on its pledge to file by that deadline -- and it's important to take a look at the contents of the reports. If all looks good at that point, it may then be fair to say that this beaten-down stock is out of the woods.
