Key Takeaways
- Co-founder Wally Liaw faces federal indictment for allegedly evading US export controls to China, sparking renewed investor panic.
- Institutional heavyweights like Tortoise Capital have completely divested from SMCI, with some analysts labeling the stock “uninvestable.”
- Shares have plummeted approximately 65% from their July 2024 high of $60.71, with year-to-date losses reaching 27% in 2026.
- Current valuation sits at roughly 7x forward earnings — significantly under the historical 10-year mean of 12x — while Wall Street maintains a collective “Hold” stance.
- A minority of investors maintain optimism, pointing to SMCI’s critical position in AI server infrastructure and anticipated fiscal 2026 revenues exceeding $40 billion.
Super Micro Computer’s journey has become one of the tech sector’s most turbulent narratives in recent memory. As a critical supplier of server systems powering artificial intelligence data centers, the company occupies a strategic position in the AI revolution. Its partnership with Nvidia is substantial — Super Micro accounts for approximately 10% of the chip giant’s total revenue. Despite these competitive advantages, the company continues to face a mounting series of challenges that have rattled investor confidence.
Super Micro Computer, Inc., SMCI
The most recent crisis erupted when Yih-Shyan “Wally” Liaw, a company co-founder, was hit with federal charges alleging he violated US export control regulations in dealings with China. Following the indictment, Liaw stepped down from his position, and the company has stated it is fully cooperating with federal investigators. Notably, CEO Charles Liang and the corporation itself were not included as defendants in the case. In a March 26 communication to stakeholders, Liang outlined enhanced oversight protocols and announced the hiring of a new acting chief compliance officer.
However, investors remained unconvinced. Tortoise Capital completely liquidated its SMCI holdings from its Tortoise AI Infrastructure ETF within days of the announcement. “The indictment was essentially the catalyst for our decision to exit entirely,” explained senior portfolio manager Rob Thummel.
Zacks Investment Management, which had already divested its stake in 2025, adopted an even more pessimistic stance. “We view this as an uninvestable security,” stated chief market strategist Brian Mulberry. “Given the involvement of executive leadership, we recommend staying away for the extended future.”
A Troubling Track Record
This controversy represents familiar territory for Super Micro. Back in 2019, the company missed regulatory filing deadlines, resulting in its removal from the Nasdaq exchange. It regained its listing status in 2020. More recently in 2024, the firm faced another compliance crisis when it was compelled to submit overdue financial statements to prevent a second delisting and maintain its inclusion in the S&P 500 index.
The stock experienced an extraordinary rally throughout 2023 and into early 2024 as corporate AI investments surged, reaching a record high of $118.81 in March 2024. From its more recent local peak of $60.71 on July 30, 2024, shares have declined roughly 65% — ranking as the second-worst performance within the S&P 500 during this timeframe.
Analyst coverage has deteriorated substantially. Early in 2026, 10 out of 23 monitored analysts maintained buy recommendations. Currently, that figure has contracted to just six, while sell ratings have climbed from three to five. The Street consensus has shifted to Hold, with a mean price target of $31.70 — suggesting potential upside of approximately 47% from present trading levels.
A Few Believers Remain
Not all institutional investors have abandoned ship. Gabelli Funds continues to maintain SMCI within its Gabelli Global Technology Leaders ETF. Portfolio manager Hendi Susanto highlights the company’s placement among the select group of major AI server manufacturers and its forward earnings multiple of slightly above 7x — markedly below both its 10-year historical average of 12x and the S&P 500’s current valuation around 19x.
Louis Navellier of Navellier & Associates, who has held the stock for an extended period, views Liaw’s departure favorably. “His exit is actually beneficial in my view, and their apparent cooperation with the Department of Justice is encouraging,” he commented.
Super Micro is projected to produce more than $40 billion in fiscal 2026 revenue, representing an 87% increase compared to the previous fiscal year. Bloomberg Intelligence analyst Woo Jin Ho observed that while short-term sales momentum appears sustainable, the indictment “may prompt clients to pursue greater supplier diversification, potentially constraining 2027 revenue growth.”
