As Short Seller Hindenburg Closes Down, is Super Micro Computer Stock a Buy?

Super Micro Computer (SMCI) is down 74.5% from its 52-week high set last March, and the artificial intelligence (AI) server stock has plummeted 64% in the past six months alone. Quite a bit of SMCI’s technical troubles can be traced back to an August short seller report from Hindenburg Research, which accused the company of self-dealing, accounting manipulation, and other misconduct. When Super Micro management subsequently announced the delay of its annual 10-K filing, investors feared the worst, and sent the stock reeling.

Since then, Super Micro Computer has faced increasing concerns over accounting irregularities amid the resignation of its auditor, which raised the prospect of a potential Nasdaq delisting. The company, which was the hottest AI growth stock on Wall Street less than a year ago, now faces a Feb. 25 deadline to bring its financial filings up to date with the exchange’s listing standards.

The latest twist for SMCI came this week when Hindenburg Research announced its closure. The prominent short-selling firm, best known for its headline-grabbing investigations into companies like the Adani Group and Nikola (NKLA), is dissolving due to personal reasons, according to founder Nate Anderson.

While some investors are cheering the prospect of Hindenburg’s short position on SMCI unwinding, the stock has a long way to go before reclaiming its previous heights. Ambitious capex plans from hyperscalers like Microsoft (MSFT) are still driving optimism about Super Micro’s potential in the AI hardware market, but the risks associated with its unresolved financial and legal issues remain significant. Geopolitical tensions and new U.S. restrictions on AI chip exports could pose further challenges, creating additional uncertainty around SMCI’s growth prospects. 

SMCI is up more than 2% today, with many AI-related names rising after a well-received earnings report from Taiwan Semiconductor (TSM). However, the shares are facing overhead pressure at their 20-day and 50-day moving averages, which are currently converging around the $32 level.

SMCI has a quarterly earnings report set for early February, which could be the next major directional catalyst for the stock. Until there’s more clarity on the company’s delayed financial filings and its status as a Nasdaq-listed security, investors should continue to proceed with caution on “Hold”-rated Super Micro Computer.