SMCI Stock 2025 (Jan 19): AI Server Upside or Nasdaq Delisting? BDO Audit Looms

SMCI (Super Micro Computer) has had a rough ~6 months and a bipolar past ~1 year… it peaked at a 52-week high of $122.90/share and hit a 52-week low of $17.25/share. It’s currently hovering around $30.

The reason for the spike in SMCI’s value was rapid growth in AI/HPC (high-performance computing) servers - they are the current leader in servers and have a reasonably strong partnership with NVIDIA.

The main reason SMCI’s value fell off a cliff was that they got axed as a client by EY (Ernst & Young), a Big Four accounting firm, due to serious concerns: financial transparency, internal controls, and governance.

In 2024 SMCI: (1) was hit with a whistleblower lawsuit, (2) became the target of Hindenberg Research alleging “accounting manipulation,” (3) delayed their annual 10-K (Aug 2024 - pushed to Nov 2025), (4) was probed by the DOJ, and (5) was removed from the NASDAQ-100 index.

Later their stock spiked a bit after: (A) internal review from an “Independent Special Committee” found no evidence of fraud or financial misconduct (these reports are mostly meaningless/useless) AND (B) agreeing to replace the CFO, appointing a new CAO, and finding a chief compliance officer & general counsel.

So here we are in January (19th) 2025 and many are wondering if SMCI is looking any better than it did 1-2 months ago as a high-risk, high ROI potential investment… and the truth is: nope… it’s still a similar gamble.

It’s not necessarily a bad gamble, but if you’re wrong be prepared for further tanking of the stock (depending on how severe the accounting/financial fraud).

• Previous (Dec 2, 2024): SMCI Stock Spikes 30% as Independent Special Committee Finds “No Evidence of Misconduct”

• Previous (Nov 22, 2024): SMCI Stock 2024: Is Super Micro Computer Worth a Gamble Investment?

SMCI’s Status (January 19, 2025)

A. Financial Filings & Audit Extension

• Nasdaq Extension: SMCI has until February 25, 2025 to file its overdue 10-K (annual) and 10-Q (quarterly) reports.

• BDO Appointment: BDO USA took over as SMCI’s new independent auditor after Ernst & Young (EY) resigned in October 2024.

• Management Confidence: SMCI leadership says they can meet the extension deadline and avoid delisting; however, market skepticism remains due to past accounting controversies.

B. Governance Review

• Special Committee Findings: An internal committee found no “material misconduct,” but that review is not as rigorous as a full external audit.

• Historical Controversies: SMCI has faced multiple accounting issues over the past decade (revenue-recognition problems, prior delisting in 2018, and various SEC actions).

C. HPC & AI Server Market Tailwinds

• HPC/AI Demand: SMCI primarily serves high-performance computing (HPC) and AI workloads with specialized, liquid-cooled servers. These markets continue to expand rapidly, driven by AI adoption and data center growth.

• Competitive Field: Larger OEMs (Dell, HPE, Lenovo) and lower-cost ODMs (Quanta, Foxconn, Wiwynn) vie for the same AI/HPC customers. SMCI’s niche edge is rapid customization, energy-efficient liquid cooling, and modular “Building Block” architecture.

D. Stock Performance

• Price History: After hitting an all-time high near $120 in early 2024, the stock collapsed to the $20 range, then recovered into the $40–$50 zone.

• Sentiment: Brokers have issued short-term price targets averaging around $50–$60, with some bullish cases reaching $100 if the audit is clean and HPC demand stays strong.

Why SMCI (Super Micro Computer) Value Might Skyrocket if BDO Audit is Fairly Clean…

No guarantees… this is just thinking logically about how if the SMCI audit goes well, this company could crush it over the next 1-5 years.

If SMCI’s audit is rife with issues, consider SMCI buried for a while.

Upside Potential:

• Inference-Focused HPC Servers: SMCI directly supplies the physical servers that run large-scale test-time compute. As inference clusters scale, HPC server integrators are critical—especially ones offering full-rack solutions with advanced cooling (DLC) to handle GPUs running massive CoT or tree-of-thought inference.

• Over 70% Revenue from AI/HPC: SMCI is already heavily exposed to AI inference, building out large DLC-based GPU superclusters (e.g., 100k GPUs). If test-time compute really explodes, they’re in prime position to see more big-cluster wins.

• Undervalued on Paper: A forward P/E near ~11, PEG ~0.3. If you believe their reported financials are accurate (still subject to BDO’s audit), the stock looks cheap relative to HPC growth.

Downside Risk:

• Reliance on GPU Supply: If GPU availability lags or HPC spending slows, SMCI’s revenue timing could be lumpy.

Inference-to-AGI Fit

Looks like AI is scaling this way… everyone is copying OpenAI’s new o3 models because that’s all competing AI Labs do is try to is copy OpenAI and play follow the leader.

• Rack-Scale HPC is the workhorse for large inference loads. If inference expands beyond training-level scale, HPC server OEMs like SMCI stand to see continuing orders for bigger, more power-dense clusters.

• Potential: High 2–5 year ROI (possibly 2–4× if the audit is clean and HPC demand remains robust).

Hindenburg Research: SMCI Takedown (2024)

LINK: Hindenburg Research SMCI takedown (Aug 27, 2024)

Recurring Accounting Allegations

• Channel Stuffing & Premature Revenue Recognition: Multiple former employees claim SMCI continues stuffing inventory with distributors, shipping incomplete or defective products near quarter-end, and re-hiring executives previously involved in past accounting scandals.

• Revenue/Expense Manipulation: The report contends that SMCI has used its “related-party suppliers” (controlled by the CEO’s brothers) to obscure true margins or artificially inflate profitability.

Undisclosed Related Parties

• Numerous Entities Run By CEO’s Brothers: Some are “officially disclosed” (Ablecom, Compuware), while others (Aeon, Ablestnet, Leadtek) appear to have close business ties to SMCI but remain unreported in SMCI filings, raising serious governance and transparency issues.

Export & Sanctions Evasion Claims

• Russia & China: The report alleges a spike in SMCI-branded products flowing into Russia post-invasion of Ukraine (via third-party intermediaries), apparently violating U.S. export restrictions.

• Fiberhome JV: SMCI’s Chinese JV partner is on a U.S. government watchlist for human rights abuses, yet SMCI continues to supply advanced servers to that JV.

Customer & Partner Issues

• Major Clients Fleeing: CoreWeave, Tesla, and Digital Ocean have (according to the report) partially switched or cut deals with Dell or other OEMs, citing repeated hardware failures or poor service.

• NVIDIA’s Public Endorsement of Dell: Suggests that SMCI’s position with NVIDIA may be eroding.

In short, Hindenburg portrays SMCI as a “serial recidivist” that has not truly reformed its accounting or compliance culture. These allegations, if even partially validated, would amplify the governance and delisting risks beyond what we had already considered in a simpler analysis.

Likely Timeline for the BDO Audit (Late Jan - Early Feb)

Although no official deadline has been stated beyond “file by February 25,” it generally takes several weeks to months for auditors to:

1. Re-verify prior financial statements (especially given past controversies).

2. Perform standard year-end audit procedures.

3. Resolve any differences with management.

Best Guess: BDO will try to finalize and sign off on SMCI’s statements by late January or early February 2025, giving management time to compile and file everything before the Nasdaq cutoff. If extra complexity arises, SMCI may push right up against February 25.