The Stock of Super Micro is Up 20%. Here’s What’s Really Behind the Big Rally

Super Micro Computer Inc.’s stock surged 22% during morning trading after the company resolved concerns about a potential delisting by submitting its overdue audited financial statements.

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The server manufacturer had faced delays in releasing these financial documents due to a series of issues that began last summer. Among these challenges was a critical report from short seller Hindenburg Research, which raised concerns about the company’s financial practices. Additionally, accounting firm Ernst & Young resigned as Super Micro’s auditor, adding to the uncertainty.

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The company faced a February 25 deadline to file the required financials with the Securities and Exchange Commission (SEC) or risk being delisted from the Nasdaq exchange.

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A Nasdaq delisting would have been a significant blow to Super Micro’s stock, according to Mizuho desk-based analyst Jordan Klein. He noted that investors felt relief once the company avoided that outcome.

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However, Klein pointed out that the dramatic rise in Super Micro’s share price appears to be driven primarily by “fast money,” referring to short-term traders, quantitative funds, and passive investors reacting to the news. He emphasized that there is little evidence of major institutional investors rushing to acquire the stock due to ongoing concerns about the company’s business fundamentals.

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One of the primary concerns is increasing competition, which could impact Super Micro’s market share and pricing power. Furthermore, investors have recently been focused on the company’s profit margins, which have faced pressure. Despite the stock’s recent jump, shares of Super Micro remain down more than 50% from their all-time high reached in March of the previous year.

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While Super Micro has overcome its immediate regulatory hurdles, there are several upcoming events that could influence the company’s stock performance. One significant catalyst is Nvidia Corp.’s earnings report, scheduled for release after the market closes on Wednesday. Klein suggested that strong results from Nvidia could provide further support for Super Micro’s stock, as the two companies are closely linked through their technology partnerships.

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However, Klein believes that Dell Technologies Inc.’s earnings report, expected Thursday afternoon, may have an even greater impact on Super Micro’s future trajectory. While Super Micro collaborates with Nvidia and is positioned to benefit from the rollout of Nvidia’s Blackwell product line, Dell remains a direct competitor in the server market.

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Adding to the competitive landscape, Melius Research analyst Ben Reitzes recently reported that Dell has secured a $5 billion contract from Elon Musk’s artificial intelligence startup, xAI. The contract reportedly involves rapid deployment of advanced systems. If accurate, this deal could reinforce Dell’s dominance in the server space, creating additional challenges for Super Micro.

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Klein argued that Dell’s commentary during its earnings call, particularly regarding margins on Blackwell-related products and broader market expectations, will be a key indicator for Super Micro’s future stock performance. Investors are expected to closely scrutinize Dell’s outlook to gauge how the competitive dynamics in the server market may evolve.

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In addition to Dell, analysts suggest that Hewlett Packard Enterprise Co. (HPE) and Super Micro could also stand to benefit from the rumored xAI contract—though to a lesser degree. Neither company has confirmed any involvement, and both declined to comment when asked about a potential partnership with Musk’s AI venture.

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The unfolding competition in the AI-driven server market reflects broader industry trends. Companies like Super Micro are vying for market share as demand for advanced computing infrastructure increases, particularly with the rise of artificial intelligence applications. However, the intense rivalry among major players such as Dell and HPE could further pressure Super Micro’s margins and growth prospects.

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While the resolution of the delisting threat has provided a short-term boost, questions remain about Super Micro’s long-term growth. Investors will be watching upcoming earnings reports from key industry players for signals about future market conditions. If Nvidia’s results exceed expectations, it may strengthen the case for Super Micro’s growth, given their partnership. However, any signs that Dell is gaining market share—especially through high-profile contracts—could present new challenges for Super Micro’s position.

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Overall, while Super Micro has successfully addressed its immediate regulatory concerns, its stock remains vulnerable to competitive pressures and questions about its ability to maintain profit margins. The upcoming reports from Nvidia and Dell are expected to be pivotal in shaping the next phase of the company’s market performance.

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