What’s Happening With SMCI Stock?

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📝 usncan Note: What’s Happening With SMCI Stock?

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In this photo illustration, the Supermicro (Super Micro...

Super Micro Computer stock (NASDAQ:SMCI) has fallen by almost 29% over the last month, as investors reevaluate its role as one of the primary players in AI. The firm, regarded as a vital provider of servers essential for implementing Nvidia’s newest GPU chips, is facing challenges on two fronts. Firstly, its Q4 2025 earnings did not meet expectations and underscored persistent margin pressures. Secondly, the latest 10-K revealed significant weaknesses in financial reporting controls, raising new concerns among investors regarding the company’s corporate governance.

Tough Quarterly Report

SMCI has developed its growth narrative around a product strategy that is closely synced with Nvidia’s GPU cycle, frequently outperforming rivals to provide server systems that are optimized for Nvidia’s latest chips through modular designs, superior cooling and power frameworks, and close collaboration on both software and hardware integration. However, growth has recently decelerated. During Q4 2025, sales grew only 8% year-over-year to $5.8 billion, while earnings per share decreased from $0.46 in Q4 2024 to $0.31. At the same time, competition from Dell, HPE, and Lenovo is intensifying as these larger companies present broader product offerings, more robust supply chains, and worldwide reach, enabling them to deliver comprehensive hardware and software ecosystems. SMCI’s profitability has also sharply declined, with gross margins falling from 17% in Q4 FY’23 to 9.5% in Q4 FY’25. This decline resulted from price reductions made to secure new design contracts and from expenses related to Nvidia’s transition from the Hopper platform to Blackwell. As the server market becomes increasingly commoditized and competitors aggressively focus on both pricing and performance, SMCI risks operating in a low-margin business model that may not provide genuine shareholder value. (Why Are SMCI Margins So Low?)

Corporate Governance Concerns

In addition to weak earnings, SMCI’s reputation has been further damaged by governance issues. The company has a history of making lofty promises and not meeting them. SMCI has cut its full-year revenue forecast twice in successive quarters, reducing the outlook from an initial expectation of 87% revenue growth for the year down to only 49%. The significant downward adjustment suggests that the company has struggled to accurately gauge demand. Moreover, SMCI has consistently fallen short of consensus earnings predictions in recent quarters, indicating that its overall growth trajectory might have been exaggerated. As we’ve emphasized before, investors should approach SMCI stock with caution.

Over the past year, Super Micro has encountered considerable controversy, including allegations of accounting discrepancies, delays in SEC filings, and scrutiny from short sellers. These issues resurfaced recently as SMCI’s latest 10-K uncovered significant weaknesses in financial reporting controls and recognized that remediation efforts may not completely address these deficiencies. Management cautioned that unresolved matters could hinder the company’s ability to report results accurately and on schedule while also increasing compliance costs.

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