Prof
Macro & Equity Commentary, Risk & Market Psychology
Super Micro Computer is the worst company added to the S&P 500 this decade, and its governance looks like a scam. Per @ns123abc, co-founder Wally Liaw, who holds about $464 million of the stock, was arrested and charged with smuggling about $2.5 billion of Nvidia GPU servers to China through a Southeast Asian shell company, including building dummy servers to fool compliance auditors. Super Micro fell 12% after hours. 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'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 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'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 has been rotten from the beginning, a stock to avoid when so many peers are available. Per @StockMKTNewz, citing CNBC, US prosecutors have charged a Super Micro co-founder, employee and contractor with smuggling Nvidia chips to China, yet the stock is only down about 3%. 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 is a national security risk that longs should have seen, since short sellers such as Hindenburg, and even Bloomberg, revealed it as a Chinese Communist Party operation years ago. That replies to a post asking why the stock is down only 12% if the whole thing is illegal. 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 should benefit as data centers buy the servers that house Nvidia's AI chips. Its quarterly sales outlook rose from $15B to $19B; the stock is 36% below its high and trades at 8x next year's earnings. It is a double from here. x.com 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
