SMCI Stock Rides Broader Optimism, Hindenburg’s Demise Fuels Bullish Retail Chatter

synopsis

Super Micro Computer, Inc. ($SMCI) stock climbed sharply in Thursday’s premarket trading, following a 1.51% gain in the previous session. 

The stock potentially benefited from a strong quarterly report from foundry Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), which increased optimism regarding artificial intelligence (AI) spending. 

Stock futures point to a firm start by tech stocks on Thursday after a strong consumer price inflation report lifted the sector in the previous session.

San Jose, California-based Super Micro manufactures AI servers and counts Nvidia Corp. (NVDA) among its customers.

Super Micro’s stock ended 2024 with a modest gain of 7.2%, as the year's front-end-loaded gains offset the weakness in the second half amid multiple headwinds. 

Short seller Hindenburg released a short report on the company in late August, alleging accounting improprieties. The company also received a Nasdaq non-compliance letter for the delayed filing of its annual report for 2024 shortly after. 

Ernst & Young (EY), Super Micro's then-auditor, resigned in late October after raising red flags regarding accounting practices and internal controls. 

Following the stock decline amid the accounting headwinds, the company was booted out of the Nasdaq 100 Index. 

Retail chatter regarding Super Micro perked up on Thursday, with several investors discussing an announcement from short seller Hindenburg that it was winding down operations.

In a letter posted on the firm’s website, Hindenburg founder Nate Anderson said he decided to disband the firm. He clarified that the decision was not due to any particular threat, health issue, or big personal issue.

Anderson said the “intensity and focus has come at the cost of missing a lot of the rest of the world and the people I care about, and that Hindenburg is now a chapter in his and not a central thing.”

Commenting on the Super Micro stream on the Stocktwits platform, a retail watcher lauded Hindenburg's demise and saw it as positive for the stock.

Some said the Super Micro report appears to be a scam and the stock could recover to $40 levels. 

One retail investor saw CNBC Mad Money host Jim Cramer’s recent sell recommendation for Super Micro and the Hindenburg shutdown as dual positives for the stock.

Listing a few catalysts, another stock watcher predicted a rally toward $100. The stock hit a record high of $122.90 on March.

The next major catalyst for Super Micro is the Feb. 25 Nasdaq deadline to regain compliance with the listing standards regarding the timely filing of financial reports.

In premarket trading, Super Micro stock climbed 1.74% to $31.53 as of 8:27 a.m. ET. 

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