Few stocks have taken investors on more of a roller-coaster ride in a single year than Super Micro Computer (NASDAQ: SMCI). At one point, the stock was up by as much as 318% from where it began 2024. Just a month ago, it was down by 36% year to date. Now, at the time of this writing, it’s up again by around 45% for the year.
The reasons behind those large movements actually were sound, considering what investors knew at the time. But now, investors want to know if Supermicro can regain the $118 high it reached earlier this year.
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Super Micro Computer has become a hot stock over the past few years because of its business. Similar to longtime artificial intelligence (AI) winner Nvidia (NASDAQ: NVDA), Supermicro makes components that go into powerful computing servers that train AI models. Supermicro also makes the components that allow a server to function, such as the physical racks and cooling infrastructure.
While not as high-margin as Nvidia’s GPUs, these are still necessary products, and Supermicro saw massive demand at the start of the year. This demand propelled its stock to lofty heights in March when it achieved the $118 per share stock price. However, this enthusiasm was too high, and Supermicro gradually sold off throughout the year as investors took profits.
The stock was still having a successful year until late August when Hindenburg Research published a short report alleging that Supermicro was engaging in some level of accounting fraud. To make matters worse, the following day, Supermicro announced it was delaying filing its end-of-year 10-K report to assess the “design and operating effectiveness of its internal controls over financial reporting.”
This kicked off the stock’s tumble, and further events — including the Department of Justice opening an investigation into the company and its auditor, Ernst & Young, resigning — made it seem like the stock was doomed. However, new information has caused the stock to recover significantly.
A special committee that included a member of Supermicro’s board, a legal team, and a forensic accounting team from Secretariat Advisors found no wrongdoing in accounting practices, although it did recommend replacing Supermicro’s CFO (a process that is currently ongoing). This news unwound basically all of the issues that drove Supermicro’s tumble over the past few months, but the stock is still well off its peak.
