(Bloomberg) - On paper, Super Micro Computer Inc. (SMCI) is the type of company that Wall Street can’t get enough of, with soaring sales, an enviable list of partners like Nvidia Corp. and its placement at the center of the artificial intelligence boom.
But a series of self-inflicted wounds — the most recent being the indictment of its co-founder Yih-Shyan “Wally” Liaw on charges of circumventing US export restrictions to China — have investors fleeing the stock in droves.
“We did exit it,” said Rob Thummel, senior portfolio manager at Tortoise Capital, which last week sold the position in the stock it held in its Tortoise AI Infrastructure ETF. The indictment “was basically the driving factor behind us getting out.”
Liaw has resigned, and Super Micro says it’s cooperating with authorities. The company and its Chief Executive Officer Charles Liang were not named as defendants in the case. But it was the latest in a string of troubles for the maker of servers for AI data centers.
“In our view this is an uninvestable stock,” said Brian Mulberry, chief market strategist at Zacks Investment Management, which unloaded its position last year. “You’d have to do an autopsy to see what is right and wrong, how material the fraud is, but certainly it seems like a strong case right now. Especially since the C-suite is involved, we would sit this out for the foreseeable future.”
Shares of Super Micro were up as much as 2.4% shortly after the start of trading on Tuesday.
Just a year ago, Super Micro was forced to file missing financial reports to avoid being delisted from the Nasdaq Stock Market and maintain its spot in the S&P 500 Index. That echoed a similar problem in 2019, when the company failed to meet filing deadlines and Nasdaq delisted the shares. They were relisted in 2020.
A representative for Super Micro responded to requests for comment by pointing to a March 19 company press release and a March 26 letter from Liang, in which he touted more stringent oversight efforts and the appointment of a new acting chief compliance officer.
Super Micro’s stock price has been highly volatile for some time. The company went public in 2007 and traded in the single digits until 2023, when demand for AI equipment kicked in and its revenues took off. The shares hit an all-time high of $118.81 in March 2024, which is around the time that the turbulence started, with relatively frequent double-digit percentage moves in either direction.
Since hitting a near-term peak of $60.71 on July 30, Super Micro’s stock is down about 65%, making it the second-worst performer in the S&P 500 over that span. At the start of 2026, 10 of the 23 Wall Street analysts tracked by Bloomberg who cover the company had buy ratings and three had sells, today six have buy ratings and five have sells. The stock has lost about 27% this year and is sitting around $21.
That said, some investors are still sticking with Super Micro, albeit cautiously, because of the company’s position in the AI infrastructure trade and its estimated future sales. Super Micro is expected to bring in more than $40 billion in revenue in fiscal 2026, an 87% jump from the year before.
“There is a short list of major players when it comes to AI servers, and Super Micro is on that short list,” said Hendi Susanto , a portfolio manager at Gabelli Funds, which holds shares in its Gabelli Global Technology Leaders ETF. “And when you look at the valuation, it offers an attractive multiple.”
The shares are priced at a little more than seven times forward earnings, the lowest since 2024 and well below its 10-year average of 12. By comparison, the S&P 500 is priced at roughly 19 times earnings and the technology-heavy Nasdaq 100 Index trades for about 21 times.
Susanto doesn’t see the indictment affecting the company’s fundamentals, at least for now. But Super Micro will have to prove to investors that there is continued growth in AI servers and that there are no more problems looming on the horizon, he said.
“We need a stronger assurance that this is an isolated incident,” Susanto said. “We need assurances that the company has strong internal controls and compliance that can be validated by third parties.”
Others believe Liaw’s departure is a positive for the company going forward.
“The fact that he’s gone I think helps, and they’re apparently cooperating with the DOJ, which is great,” said Louis Navellier, chief investment officer at Navellier & Associates, which has held shares of Super Micro for a few years. “Hopefully the company won’t be charged.”
Navellier remains bullish on the stock because he sees Super Micro as a winner in the AI buildout with a large order backlog coming to fruition and a reliable supplier in Nvidia, which gets about 10% of its revenue from Super Micro, according to Bloomberg supply chain data.
Of course, there are plenty of investors who fear that the latest debacle will hurt sales and open the door for competitors such as Dell Technologies Inc. and Hewlett Packard Enterprise Co. to gain market share.
The indictment “could drive customers to seek more supplier diversity, pressuring 2027 revenue, even as near-term sales execution likely remains intact,” Woo Jin Ho, a senior analyst at Bloomberg Intelligence, wrote in a March 26 note. “This is the second high-profile governance lapse since 2024 under CEO Charles Liang. Management and governance changes are needed to restore confidence.”
To Tortoise Capital, those risks outweigh Super Micro’s growth potential — even with the stock’s cheap valuation.
“Their servers are still needed,” Thummel said. “And from a valuation perspective the stock still looks pretty reasonably priced. But the valuation kind of moves to the side here after the series of events.”
By Carmen Reinicke and Ryan Vlastelica
