Super Micro Stock’s Plunge Will Boost This Company’s Shares, Wall Street Says

• Wells Fargo said in a note on Friday, “What is bad for SMCI is good for DELL, just in terms of market share shifts.”
• Wedbush analyst Matt Bryson reportedly said that Dell is most likely to scoop up business from Super Micro. 
• On Thursday, the U.S. Attorney’s Office unsealed an indictment that charged three individuals related to Super Micro with smuggling many of Nvidia’s high-performance AI servers to China.

Super Micro Computer Inc. (SMCI) shares are plunging amid smuggling charges from the U.S. Attorney’s Office against its employees and a contractor, including a co-founder of the company. Meanwhile, Wall Street analysts reportedly believe Dell Technologies Inc. (DELL) could benefit from this.

According to a CNBC report, Dell Technologies, another system builder in the artificial intelligence ecosystem, is a prime alternative for SMCI’s AI servers.

For context, Dell is a direct competitor to SMCI in the enterprise and AI infrastructure markets. It sells servers, storage, and other solutions that can be seen as substitutes for SMCI’s products.

Wells Fargo said in a note on Friday, “What is bad for SMCI is good for DELL, just in terms of market share shifts,” as per CNBC.

SMCI stock was down more than 27% on Friday at the time of writing, while DELL stock has gained nearly 6%. The Defiance Daily Target 2X Long SMCI ETF (SMCX), which tracks twice the daily price movement of Super Micro, tumbled more than 55% on Friday.

Wall Street’s Rationale

Meanwhile, Wedbush analyst Matt Bryson reportedly said that Dell is most likely to scoop up business from Super Micro. “If SMCI operations are disrupted, we would suspect DELL might be the most immediate beneficiary as Dell has emerged as the other significant supplier of AI servers/equipment to large non-hyperscale AI customers (neoclouds, sovereign entities, model builders),” Bryson said, as per CNBC’s report.

Melius Research’s Ben Reitzes also commented on Dell’s gains from SMCI’s decline, saying the latest mishap of the smuggling case could be Dell’s “biggest windfall yet.”

“Of the U.S. resellers of AI servers, Dell had the best relationship with Nvidia before this headline – now it will just get better,” Reitzes reportedly said.

Jefferies also noted that Dell was looking strong in light of SMCI’s smuggling case, while Mizuho said Dell “would be a net winner if share shifted.”

Smuggling Allegations

On Thursday, the U.S. Attorney for the Southern District of New York unsealed an indictment that charged three individuals related to Super Micro with diverting many high-performance AI servers to China, specifically those of Nvidia Corp. (NVDA), without obtaining permission from the U.S Department of Commerce, thereby in direct violation of export control laws.

Two SMCI employees, including co-founder Yih-Shyan “Wally” Liaw, a manager, and a contractor, were charged with the violation. However, Super Micro had not been named as a defendant in the indictment.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around DELL shares remained in the ‘bearish’ territory in the past 24 hours, amid ‘extremely low’ message volumes.

Meanwhile, retail sentiment around SMCI shares was in the ‘neutral’ territory amid ‘normal’ message volumes.

One user said that Dell shares were finally trading like they should have, adding that the company was always likely to have taken over business from SMCI.

SMCI shares have plummeted more than 42% in the past year, while DELL stock has gained more than 67% in the same time.

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