SMCI Selloff: Analyst Sees Dell Poaching AI Server Market Share After Super Micro Chip Smuggling Scandal

• SMCI shares are down about 28% since March 19, when the government announced charges against the company’s co-founder and two persons for smuggling Nvidia chips to China.
• Dell stands to benefit the most; Mizuho sees its share of the AI server market growing at the expense of Super Micro and Taiwanese manufacturers, such as Foxconn Technology and Quanta Computer.
• Stocktwits sentiment for SMCI has dipped this month, and was ‘bearish’ on Monday.

Mizuho Securities has said that the indictment of Super Micro’s co-founder and the resulting negative publicity might lead some customers to shift demand to rival Dell Technologies.

On Monday evening, the research firm reiterated an ‘Outperform’ rating on Dell, raising its price target to $215 from $180, while maintaining a ‘Neutral’ rating on Super Micro and cutting its target to $25 from $33. SMCI shares declined 5% to $22.05, while DELL stock dropped 0.7% to $173.18.

SMCI Chip Smuggling Controversy 

SMCI shares have tumbled about 28% since March 19, when the U.S. government announced charges against Yih-Shyan "Wally" Liaw and two other persons associated with the company for allegedly diverting servers to China in violation of export-control laws. Super Micro itself was not named as a defendant.

Since then, several analysts have cut their price targets and ratings on Super Micro, with some warning that the controversy could lead to reduced customer orders and, in a worst-case scenario, regulatory scrutiny and limitations.

Retail’s View On SMCI

On Stocktwits, the retail sentiment for SMCI has dipped this month and was ‘bearish’ on Monday. “$SMCI totally unnecessary drop today, bounce will come with May ER just a few weeks away now,” said a user. The company has yet to set a date for the release of its fiscal third-quarter results.

Analyst Sees Dell Gaining

Mizuho believes Super Micro might nonetheless lose market share. With large sales and support staff, a strong supply chain, and a strong balance sheet, Dell stands to benefit the most. 

Mizuho sees its market share growing to 25% in 2029 from 19% in 2025 at the expense of Super Micro and Taiwanese manufacturers, such as Foxconn Technology and Quanta Computer.

The brokerage lifted its estimates for Dell’s AI server orders to $53 billion in fiscal 2027 and $68 billion in fiscal 2028, up from previous estimates of $50 billion and $61 billion, respectively.

Still, with AI server demand remaining robust on the back of strong hyperscaler capital spending, Super Micro’s long-term outlook remains constructive, Mizuho said.

SMCI shares are down 25% year-to-date. Dell shares are up 38%.

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