According to The Wall Street Journal, the US Department of Justice is investigating Super Micro Computer (SMCI). The report indicates that a prosecutor from the San Francisco US Attorney's Office has requested information regarding a former employee who accused Super Micro Computer of accounting irregularities.

Earlier this month, Super Micro Computer denied the allegations made by short-selling institution Hindenburg Research in a report, stating that the report contained "false or inaccurate statements" about the server manufacturer. In August of this year, Hindenburg disclosed a short position on Super Micro Computer, alleging "accounting manipulation" due to undisclosed related-party transactions and non-compliance with export controls.

Since the short-selling company Hindenburg released a report in August, Super Micro Computer has stated that it will be unable to timely file its annual report for the current fiscal year with the US Securities and Exchange Commission, causing the stock price to plummet by nearly 20%. It is currently unclear whether the delay is related to the company's financial reporting issues.

Both Super Micro Computer and the US Department of Justice have declined to comment on this matter, with Hindenburg also not immediately responding to comment requests.

On Thursday, September 26th, Super Micro Computer's stock price closed down by 12.17%.

(Source: Google)

Super Micro Computer mainly produces AI server devices with Nvidia GPUs. Wall Street analysts believe it is a major hardware supplier for Meta.

With the increasing demand for AI software in the technology industry, super micro computer's business rapidly developed in early 2024, driving the company's demand for products. Despite a drop in stock price on Thursday, its stock price still rose by 57% compared to last year, and it has entered the ranks of record-breaking AI-driven stocks.

Super Micro Computer's profit growth also led to its inclusion in the S&P 500 index earlier this year. However, before joining, the company's stock price had significantly fallen from its mid-March high of $1200. In early August, the company's fourth-quarter earnings did not meet Wall Street's expectations, leading to a decrease in stock price. Later that month, the stock price fell further due to the delay in filing the annual 10-K report.

Regarding the allegations in the report and the delay in financial reporting, Super Micro Computer CEO Charles Liang stated in a letter to customers on September 3: 'Neither of these events would affect the quality of our products, nor our ability and capacity to provide innovative IT solutions for customers. Our production capacity has not been affected and we can still meet customer demands on time.'

The company's announced EPS for the fourth quarter of August was $6.25, below analysts' expectations of $8.25. The revenue was $5.3 billion, slightly below Wall Street's expected $5.32 billion, but more than doubled compared to the same period last year.

Liang also mentioned in the letter, 'We don't expect any significant changes in our financial performance for the fourth quarter or the 2024 fiscal year.'

However, JPMorgan analyst Samik Chatterjee recently downgraded Super Micro Computer's stock rating from shareholding to neutral, and significantly reduced the target price from $950 to $500. On Thursday, Super Micro Computer's stock price dropped to $373 at one point, but later rebounded to around $400 in the afternoon.

According to Bloomberg estimates, as of Thursday afternoon, nearly 37% of Wall Street analysts still recommend buying the stock. Analysts expect the stock price to rise to $685 in the next 12 months.