Super Micro Computer Inc Faces Uncertain Future Amid Nasdaq Challenges

Super Micro Computer Inc SMCI stands at a critical juncture. Once buoyed by Nvidia Corp‘s NVDA AI-driven success, the server manufacturer is now confronting multiple challenges that could impact its very existence.

With a Nasdaq delisting deadline approaching, investors are closely watching Nvidia’s earnings report on November 20 to assess whether Super Micro can stabilize or continue to falter.

The Influence of Nvidia’s Market Power

Super Micro’s association with Nvidia has been both advantageous and detrimental.

Chart created using Benzinga Pro

Nvidia’s leadership in AI chip technology initially propelled SMCI stock prices significantly, particularly in early quarters. However, changes in Nvidia’s strategy now bring uncertainty to that equation.

Rumors indicate Nvidia may start directing orders to other server providers, potentially sidelining Super Micro. While Nvidia has not verified these claims, the underlying risk to its relationship with Super Micro is palpable, particularly amid the latter’s ongoing scandals.

The upcoming earnings call on November 20 could be critical for SMCI investors. Should Nvidia indicate a cooling relationship with Super Micro, the already low stock price might take a further hit. Conversely, if Nvidia remains silent on this issue, Super Micro may receive a temporary boost.

Read Also: Jim Cramer Says Super Micro In ‘Real Hot Water’ As Stock Plunges 10% In Thursday Pre Market After Falling Nearly 60% This Week

Nasdaq Delisting Threat Looms for Super Micro

The challenges for Super Micro extend beyond its relationship with Nvidia. The company is under pressure to meet a Nasdaq deadline of November 16 to resolve late SEC filings stemming from an ongoing accounting issue highlighted by Hindenburg Research’s critical short report.

Delays in its 10-K filing and subsequent postponement of its 10-Q, alongside the resignation of auditor Ernst & Young in October, paint a grim picture for SMCI.

If Nasdaq initiates the delisting process, SMCI could lose access to key ETFs and possibly exit the S&P 500, relegating it to over-the-counter trading.

This potential downgrade could deter institutional investors, further exacerbating its declining stock value.

Nvidia’s Earnings: A Key Indicator for SMCI

Despite the troubling landscape, Super Micro is not completely without options. An independent committee recently found no evidence of fraud within its management and plans to propose corrective actions shortly. If these suggestions and a sound compliance strategy for Nasdaq are persuasive, Super Micro could gain additional time to recover.

However, even if it navigates these challenges successfully, earning back Nvidia’s trust and restoring its market credibility will be a significant hurdle.

In the coming week, investors should be prepared for what may well be a decisive moment for both Nvidia’s earnings report and Super Micro’s future.

Read Next:

Photo: Shutterstock