The "magnificent seven" performed well in 2023. Audit firm Ernst & Young suddenly resigned.Super Micro Computer's stock price has plummeted for two consecutive days, with a cumulative drop of over 40%, and the company's stock price fell to the lowest level this year during overnight trading.

Super Micro Computer's latest market cap is $17.046 billion, falling below the $18 billion market cap threshold of the S&P 500 Index. The company was only included in the index in March of this year.

Previously, Super Micro Computer's stock price soared more than 10 times within a year, reaching its peak in March of this year, becoming one of the most prominent winners in AI-related infrastructure investments.

However, since the peak in March, Super Micro Computer has accumulated a drop of nearly 75%. This may be an important signal that the speculation on AI in the capital markets is not entirely rational.

Facing delisting risk.

Currently, Super Micro Computer is facing the risk of delisting from the Nasdaq.

On August 28th, Super Micro Computer announced that it is expected to be unable to submit the 2024 10-K annual report by June 30th for the fiscal year.

According to Nasdaq rules, Super Micro Computer needs to submit the report within 60 days or submit a plan to regain compliance. If a compliant plan is not provided by November 16th, the company may be delisted from the Nasdaq.

It is noteworthy that this is not the first time Super Micro Computer has faced delisting risk. In 2018, it was delisted from Nasdaq due to failure to submit financial reports twice.

On Wednesday, Super Micro Computer also issued an announcement, stating that the first quarter report of the 2025 fiscal year, covering the performance from July to September this year, will be released after market close on November 5th.

In response, Tianfeng International analyst Ming-Chi Kuo's latest post suggests that the probability of Super Micro Computer suspension/delisting is increasing. There may be significant changes in the company's senior management, board of directors, and possible mergers and acquisitions.

Guo Mingji said that from past experience, the resignation of auditors/accountants is a very serious matter. The probability of super micro computer developing towards the worst outcome is increasing, which means suspension or delisting.

This will indirectly lead to a decline in the competitiveness of super micro computers, as well as more severe survival challenges. The company's competitors are a bunch of large manufacturers with money and resources.

Guo Mingji believes that although super micro computers' influence on the AI server industry has gradually waned, the company's GB200 mass production schedule lags behind Hon Hai and Quanta by 3-6 months, but it still has decent design and manufacturing capabilities for AI servers.

He expects that in the future, there may be a major change in the senior management and board of directors of super micro computers, and even the possibility of further mergers and acquisitions between companies, similar to the precedent of AMD's acquisition of ZT Systems.

Still bullish in the long term?

At the same time, Wall Street generally expresses concerns about the financial condition and prospects of super micro computers.

A Mizuho analyst wrote in Wednesday's report: "Without auditors, we believe the risk of delisting is higher, and finding a new auditor may face challenges."

Gordon Haskett's analyst also stated that the news of Ernst & Young's resignation is a "heavy blow".

Argus Research downgraded Super Micro Computer's rating from 'buy' to 'hold' on Thursday, stating that the company faced auditor resignations and a US Department of Justice investigation, meaning 'the stock is no longer trading on fundamentals'.

However, analyst Jim Kelleher remains bullish on Super Micro Computer's long-term prospects, saying:

"Once the company engages with a new accounting firm, submits filings in a timely manner, and resolves all issues faced by the Department of Justice, we will re-list Super Micro Computer in the 'buy' category."