Super Micro Stock Extends Fall: Top Analyst Downgrades, Cuts PT 65% amid China Probe

Shares of Super Micro Computer SMCI -33.32% ▼ fell in pre-market trading Monday, extending a 33% plunge on March 20 amid ongoing governance turmoil. Northland Securities’ top analyst Nehal Chokshi downgraded SMCI to a Hold rating from Buy, and also slashed his price target by 65%. His revised price target of $22 (down from $63) implies 7.2% upside potential from current levels.

Claim 30% Off TipRanks Premium

• Trade NVDA with leverage
• New trading tool for NVDA bulls/bears
• Forget margin or options. Here’s how the pros trade NVDA

Chokshi views the recent separation of the Chief Compliance Officer (CCO) and Chief Financial Officer (CFO) roles as a positive step, but he calls it “reactionary rather than proactive.”

Chokshi is a five-star analyst on TipRanks, ranking #308 out of 12,128 analysts tracked. He has a 53% success rate and an average return per rating of 19.60%.

Backdrop on the Smuggling Charges

On Friday, U.S. prosecutors indicted three SMCI employees, including co-founder Yih-Shyan “Wally” Liaw, for smuggling about $2.5 billion of Nvidia NVDA -3.28% ▼ -powered AI servers to China. Employees evaded U.S. export bans by routing SMCI servers via a Southeast Asian firm for repackaging and shipment to China. Super Micro fired a contractor and suspended two staff, while the company is not named as a defendant in the complaint.

Following the charges, Liaw resigned from the board, while SMCI also appointed DeAnna Luna as acting Chief Compliance Officer.

Analyst Turns Bearish on Reactionary Move

Chokshi’s bearish turn comes against the backdrop of Super Micro’s rocky 2024-2025 period, marked by auditor Ernst & Young’s (EY) abrupt resignation in late 2024 over alleged independence issues between the board and management. The latest episode re-raises questions about board oversight, especially as it is the second instance spotlighting co-founder Wally Liaw’s aggressive sales practices.

Chokshi warns that until Super Micro takes decisive action to split the Chairman and CEO roles, currently both held by Charles Liang, the company will struggle with flattish revenue and earnings growth. SMCI, a key supplier of servers and components for AI data centers, has faced delayed filings, Nasdaq compliance warnings, and a stock plunge of over 90% from 2024 highs, eroding investor confidence despite its ties to Nvidia and the AI boom.

Is Super Micro a Good Stock to Buy?

On TipRanks, SMCI has a Hold consensus rating based on two Buys, eight Holds, and three Sell ratings. The average Super Micro Computer price target of $34.33 implies 67.2% upside potential from current levels.

Disclaimer & DisclosureReport an Issue