Banana3
Professional Trader/Investor, Real Estate Developer, 25 Years’ Experience
Super Micro Computer's smuggling scandal is a black eye that will take a long time to heal and likely leave a permanent scar, making it a no-touch stock. Per @ns123abc, co-founder Wally Liaw was arrested and charged with smuggling $2.5B of Nvidia servers to China through a Southeast Asian shell company. With a founder and several employees arrested, vendors may move to Dell. x.com x.com x.com
Super Micro Computer looks like a fraud, and the earlier alarm raised on it is being borne out. x.com
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.com
Super Micro's fundamentals are outrunning fear over its legal and accounting baggage. Its quarter beat with EPS of $0.84 versus $0.61 expected, gross margin rebounded to 10.1%, showing regained pricing power, and next-quarter revenue is guided up to $12.5 billion as AI customers queue for liquid-cooled servers. Management found no need to restate past results despite audit delays. Given the China export, DOJ and accounting issues, this is a bounce trade, not a long hold. x.com x.com
Super Micro's export-control indictment is a high-severity governance event that reaches the core of the investment case. The DOJ charged co-founder and director Wally Liaw and two others, alleging about $510M of servers were diverted to China through concealment; the company isn't a defendant. The $2.5B channel is about 11% of FY2025 revenue, material but not existential. It lands on unremediated control weaknesses after EY resigned, and a 6.3% gross margin with negative operating cash flow. … Show more
Super Micro Computer should come off the watchlist because its administrative team has a criminal history. x.com
Super Micro is a buy on fundamentals, though the near term will be a disaster. It needs time to stabilize under better management, so any buying should be scaled in slowly. x.com
Super Micro Computer's CEO reeks of questionable character, and Taiwan's raid on its offices in an expanding chip-export probe adds to the concern. The open questions are how severe any fraud is and whether it is already priced in. x.com
Super Micro Computer is an AI hardware company with a history of fraud and is likely committing some kind of fraud now, so a surprise guide of 15-17% Q4 gross margins versus 8% previously does not make it a credible long. x.com
Super Micro Computer's nearly 40% drop over the past month is a market overreaction, since the allegations targeted a director, not the company, and found no company wrongdoing. Some of the pressure may have been competitor-driven or politically amplified. What matters is engineering strength: it builds roughly all of xAI's servers, is involved early in Terafab, and is often the first partner AI-chip startups such as d-Matrix turn to. It remains a long-term hold. x.com
Super Micro Computer faces governance risk as Taiwan's chip-smuggling probe reaches it. Per the Kobeissi Letter, the stock fell more than 9% after its Taiwan office was raided. The raid is unsurprising given that its CEO smuggled Nvidia products to China. x.com
