Bill Brooklyn
Capital Preservation, Asymmetric Risk/Reward, Holding Winners
Super Micro Computer's strong demand outlook and revenue growth do not guarantee long-term strength. Margins, capital intensity, supply-chain risks and competition all matter alongside growth. Management has moved past earlier allegations, but sentiment still weighs on the valuation, so the risks deserve as much weight as the growth potential. x.comÂ
Super Micro's management cannot be trusted, which is reason enough to stay away. Its claims, especially the "$60B in backlog," deserve heavy skepticism, and the company now sees fiscal Q4 revenue near the low end of its $11B-$12.5B guidance. Reliable management that turns words into action and does not engineer the books is a core requirement, and SMCI fails it. x.com x.comÂ
Super Micro Computer faces serious legal and regulatory fallout as its problems involve smuggling of Nvidia H-series chips, not just financial reporting. Possible outcomes include forced delisting, investor class-action lawsuits, jail time for CEO Charles Liang and FTC fines, so the stock is best avoided. x.comÂ
Super Micro Computer's turnaround looks underway as selling pressure has been exhausted. Strength showed even before the stock reclaimed its 200-day moving average, as negative news used up the last supply, shares moved to stronger hands, and positive narratives replaced old negative ones. Past management practices and alleged fraud remain a concern. x.comÂ
Super Micro Computer is a stock to avoid because its management is sketchy and the company has engaged in shady activities, making it highly volatile and unpredictable. There is not enough reward for the risk, and better investments offer clearer multi-year execution and market leadership. x.com x.comÂ
Super Micro Computer's fraudulent backdrop is now catching up with it, as it faces fraud charges for smuggling Nvidia GPUs to China. A forensic accounting review flagged it in May 2024 and Bloomberg warned in February 2021, so the best play was not to own it. Nvidia, for which Super Micro is the third-largest customer, may be next, given round-tripping and other accounting dangers. x.com x.comÂ
Super Micro's roughly 70% share of direct liquid cooling makes it essential AI plumbing, which the market is not pricing amid its scandals. Blackwell racks run over 100kW, too dense for air cooling, so every hyperscaler scaling inference needs DLC hardware. Q2 FY26 revenue rose 123% to $12.68B and FY26 guidance is at least $40B, yet it trades near 7x forward earnings versus 23x+ for peers. Cleaner governance could rerate it to $40-50; if the co-founder's indictment spreads, 30-50% downside. … Show more
Super Micro Computer's 15.5% jump on its Nvidia AI data-center launch looks hard to buy into, because one of its co-founders was charged in an alleged $2.5B scheme to divert AI servers to China. x.comÂ
Super Micro Computer does not deserve anyone's time or money because its governance problems keep mounting. It has dealt with multiple bouts of accounting fraud, a third-party auditor quit over doubts about its financial statements, a co-founder was caught illegally smuggling Nvidia chips into China, and now its offices are being raided. x.comÂ
Super Micro Computer should soon offer one of its best entry points, around $9-12, as a FUD narrative pushes the price lower so market makers can accumulate. Once that is done, demand should surge again and carry the stock past its previous all-time high. x.comÂ
Super Micro's proposed $7.0 billion of equity and equity-linked financing to fund AI orders is huge next to its $24B market cap. Its claim of $39B in AI server orders deserves skepticism, since the company does not have the best track record. x.com x.comÂ
