- Retail investors largely expect the controversy to pass, with shares poised to rebound, particularly as the underlying demand for AI chips remains at record levels.
- U.S. prosecutors have indicted three persons linked to Super Micro Computer, including one of its co-founders, of diverting Nvidia servers to China in violation of export rules.
- Stocktwits sentiment for SMCI has held up in the ‘extremely bullish’ zone since the stock 33% slide last Friday.
Super Micro Computer’s shares gained 3% in early premarket trading on Wednesday, keeping up their rebound after a smuggling scandal involving the company’s co-founder shaved off a third of the stock’s value.
Super Micro has maintained that the company is not named in the indictment by U.S. prosecutors that names Yih-Shyan “Wally” Liaw, sales manager Ruei-Tsan “Steven” Chang, and contractor Ting-Wei “Willy” Sun for illegally diverting billions of dollars of Nvidia components to China in violation of export rules.
SMCI Stock Move
Super Micro shares crashed 33% last Friday, after the indictment was unsealed. They gained 5.1% on Monday and 3% on Tuesday, respectively. Still, a number of analysts have trimmed their price targets on SMCI stock and say the company could face hurdles as it emerges from the controversy.
Analysts React To Smuggling Controversy
Bank of America slashed its target on the shares to $24 from $34 on Tuesday, and kept an ‘Underperform’ rating.
The indictment could lead to some suppliers restricting the company's access to components, some customers pausing orders or awarding contracts to competitors, and more regulatory scrutiny, the research firm said in its investor note.
Citi lowered the target to $25 from $39 and kept a Neutral rating on the shares, arguing that the shares warrant a lower valuation pending more visibility on the company's path forward.
In recent days, Northland cut its rating on SMCI to ‘Market Perform’ from ‘Outperform,’ Argus lowered its rating to ‘Hold’ from ‘Buy,’ and CJS Securities doubled downgraded the stock to ‘Underperform’ from ‘Outperform.’ Meanwhile, Loop Capital and Raymond James maintained their ‘Buy’ or equivalent ratings.
Currently, five out of 18 analysts recommend ‘Buy’ or higher, nine recommend ‘Hold,’ and four recommend ‘Sell’ or lower, per Koyfin, signaling a divided view on Wall Street.
Retail Upbeat SMCI View Holds Firm
To be sure, Retail sentiment for SMCI has held up in the ‘extremely bullish’ zone since Friday’s selloff, and many traders argued the potential of a significant rebound.
“$SMCI this could be the beginning of a real melt up.. earnings around the corner cease fire deal in play, momentum builds this could blast past $30,” said a user.
Another wrote: “AI data center and infrastructure spending this year is north of 700B, and next year over $1T. $SMCI will skyrocket to $35 in days $65+ by Dec.”
As of the last close, SMCI stock has shed 24% year to date.
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