Key Takeaways
- Super Micro Computer (SMCI) shares plummeted approximately 10% during Thursday’s session, continuing the company’s turbulent period.
- Research firm BlueFin reported that Oracle terminated plans to acquire 300–400 AI server racks from Super Micro, representing $1.1–$1.4 billion in lost revenue.
- Co-founder Yih-Shyan “Wally” Liaw is facing federal charges related to the alleged illegal export of restricted Nvidia chips to China.
- Several class action lawsuits claim the company engaged in a $2.5 billion scheme to ship restricted GPU servers to Chinese entities.
- The company’s Q2 FY2026 revenue reached $12.68 billion, surpassing expectations by 23%, with annual guidance increased to $40 billion.
Thursday proved to be a punishing day for Super Micro Computer investors. Shares tumbled approximately 10% during morning hours, dropping from Wednesday’s closing price of $29.18 to a session low of $26.07. The decline came after a strong month that saw the stock rally 35%, creating vulnerability to negative developments.
Super Micro Computer, Inc., SMCI
The negative catalysts materialized swiftly.
Research firm BlueFin Research disclosed that Oracle has terminated its planned procurement of 300 to 400 AI server racks from Super Micro. With each rack containing Nvidia chips and valued at approximately $3.5 million, the scrapped deal represents between $1.1 billion and $1.4 billion in forgone revenue.
Industry sources indicate Oracle is shifting this substantial order to competitors such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle’s shares also declined in early trading as market participants assessed potential delays to its cloud infrastructure buildout.
Mounting Legal Challenges
The Oracle contract cancellation arrives amid escalating legal pressures. Co-founder Yih-Shyan “Wally” Liaw is confronting a federal indictment alleging participation in a conspiracy to illegally export restricted Nvidia chips to Chinese entities. Liaw pleaded not guilty during his New York court appearance earlier this month.
Multiple law firms have initiated class action litigation against Super Micro. Legal firms Levi & Korsinsky and Faruqi & Faruqi cite allegations of a $2.5 billion unlawful scheme involving the diversion of restricted Nvidia GPU servers to China-based buyers. The proposed class period extends from April 30, 2024 through March 19, 2026, with May 26 set as the deadline for lead plaintiff motions.
A previous Department of Justice indictment involving three company-connected individuals triggered a 33% stock decline.
JPMorgan responded by reducing its SMCI price target from $40 to $28 while maintaining a neutral stance.
BlueFin’s research also highlighted concerns about surplus inventory of legacy GPU models that are proving difficult to liquidate, compounding the company’s challenges.
Revenue Growth Masks Margin Erosion
The company’s fundamental performance presents a more nuanced picture. Super Micro’s second quarter fiscal 2026 results, announced February 3, demonstrated impressive revenue growth. The company posted $12.68 billion in revenue, significantly exceeding the $10.34 billion analyst consensus and representing 123% year-over-year expansion.
Non-GAAP earnings per share of $0.69 beat the $0.49 estimate by 41%. Leadership elevated full-year fiscal 2026 revenue projections to a minimum of $40 billion from the prior $36 billion target. CEO Charles Liang highlighted more than $13 billion in Blackwell Ultra system orders.
However, profitability metrics present concerns. GAAP gross margin contracted to 6% from 12% in the prior year period. This widening disconnect between revenue acceleration and margin deterioration continues to draw analyst scrutiny.
The analyst community remains divided: 5 Buy ratings, 9 Hold ratings, and 4 Sell ratings, generating a consensus target price of $33.20.
Investors await the company’s third quarter fiscal 2026 earnings report, currently projected for May 5.
