Wall Street has spent two months pricing in the worst for Super Micro Computer Inc. (NASDAQ:SMCI). It hasn’t started pricing in the recovery.
- SMCI stock is climbing. See the chart and price action here.
Since the March 19 DOJ indictment unsealed charges against three SMCI-linked individuals — including co-founder and board member Yih-Shyan “Wally” Liaw — for allegedly routing $2.5 billion in Nvidia-powered servers to China, Super Micro’s stock has been treated like a company under criminal investigation.
It isn’t. SMCI was not named as a defendant. Liaw resigned from the board the next day and pleaded not guilty.
The stock still fell 33% in a single session, erasing over $6 billion in market cap. The repricing made sense in the moment.
What’s harder to justify now is the multiple staying this compressed while the compliance story quietly turns.
Compliance Efforts
SMCI disclosed on Thursday that it had actively collaborated with Taiwanese authorities to intercept diverted servers before they reached China’s restricted market — resulting in three arrests and the seizure of more than 50 units.
The company said the original sale cleared a vetting process that “exceeded applicable government requirements.”
That’s not a company that looked the other way. That’s a company that called in the authorities on its own supply chain.
A new chief compliance officer has been appointed. A forensic accounting firm is conducting a targeted transaction review. The infrastructure of a genuine compliance turnaround is being built in real time.
SMCI Financials
Meanwhile, the business itself never broke.
Super Micro's Q2 revenue came in at $12.68 billion, up 123% year-over-year, beating consensus by $2.3 billion. SMCI still sits at roughly 21.7 times earnings while peers average 45x-plus, according to Benzinga Pro.
The 3 most-recent analyst ratings were released by Mizuho, Barclays, and Rosenblatt in May and hold an average price target of $36.67 between them, with an implied 21.54% downside for SMCI.
Many analysts are neutral, and JPMorgan’s explicit “corporate governance” concern is the reason most of them cite for not upgrading.
The corporate governance concern was legitimate in March.
After Taiwan, a new CCO and a forensic review, it’s starting to look like a lagging indicator. The scandal has been in the stock for months.
The turnaround hasn’t shown up in the multiple yet — and that’s the trade.
SMCI Stock Price Activity: Super Micro Computer shares were up 12.55% at $46.48 at the time of publication on Friday, according to Benzinga Pro data.
Photo: Piotr Swat / Shutterstock
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