Like a frog in a pot of boiling water, things are getting more and more uncomfortable Super microcomputer (NASDAQ: SMCI) as time passes.
Supermicro’s growing accounting debacle began in late August as the target of a short report from Hindenburg Research. Just a day later, the company postponed the 10-K filing. In September, the Justice Department launched an investigation into the company over accounting issues The Wall Street Journaland last month Ernst & Young resigned as the company’s accountant, a glaring red flag.
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Since then, the company reported preliminary results for the first quarter of 2025, but offered little clarity on the status of its 10-K filing and other challenges. Unsurprisingly, the company also just filed a request to delay its 10-Q report.
Consequently, the stock has fallen 65% since Hindenburg published his report.
Investors curious to see where Supermicro goes next may not have to wait long, as these issues could come to a head next week. There are two main reasons for this.
Image source: Getty Images.
Supermicro has received a message from Nasdaq on September 17 that it did not comply with exchange rules requiring timely filing of reports with the Securities and Exchange Commission (SEC). According to that notice, Super Micro Computer has 60 days to file its 10-K or submit a plan to Nasdaq to return to compliance. That period ends on November 16, which means the removal procedure could begin as early as Monday, November 18. That would mean that the stock would be traded over-the-counter (OTC) and lose its place on the stock exchange. S&P500as well as the wide range of exchange-traded funds (ETFs) that hold the shares.
Currently, it’s unclear how the company plans to handle the delisting notice, as it doesn’t appear to be about to file its 10-K statement, especially since it still doesn’t have an accountant . In its preliminary first-quarter earnings report on November 5, management said it plans to take the necessary steps to return to Nasdaq compliance as soon as possible. Since the company appears unlikely to file its 10-K in the coming days, investors should expect it to submit a plan to regain compliance, although it’s unclear what that would entail.
Supermicro also shared an update on November 5 from the newly formed Independent Special Committee, stating that the Audit Committee operated independently of any influence from CEO Charles Liang, and that there was no evidence of fraud or misconduct by management or the board of directors.
The Independent Special Commission is also recommending a series of corrective actions, and said the full report would be ready by the end of this week.
Supermicro is clearly under pressure and the company could face fines from the SEC or DOJ, not to mention possible financial adjustments that would further devastate the stock. However, the biggest risk to Super Micro Computer’s business appears to be the loss of its close relationship with Super Micro Computer Nvidia (NASDAQ: NVDA)his main partner.
Nvidia is already distancing itself from Supermicro, according to reports saying the artificial intelligence (AI) chip giant is redirecting orders from Supermicro to other server companies. Nvidia has not confirmed these reports, but assuming they are accurate, this move is likely due to fears of reputational risk from its ties to Super Micro Computer. Nvidia may also want to avoid operational issues at Supermicro as the former launches its latest Blackwell chips.
Investors will get an update from Nvidia on Wednesday, November 20 when the company releases its fiscal third-quarter results. The earnings call could shed some much-needed light on the situation at Supermicro.
Super Micro Computer is running out of time to address its various issues, and the stock appears to be at a crucial juncture. Investors could find out how viable the future is as early as next week.
If the company fails to submit a plan to Nasdaq to remain compliant, and Nvidia indicates in its earnings report that Supermicro’s problems are more persistent than thought, the stock could enter a downward spiral that will be difficult to reverse.
That said, it is also possible that the company will recover as well, but the momentum and facts on the ground seem to be going in the opposite direction. Right now the stock is too risky, but it’s worth paying attention to what happens with Supermicro in the coming weeks. If the company can stay compliant with the Nasdaq, reassure investors with the findings of its special committee and approve Nvidia’s earnings report without bad news, daylight could come for the stock.
Still, it won’t be easy for the company to clean up its reputation and regain investor confidence.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
Next week could be huge for supermicrocomputer stocks. 2 Big Things Investors Need to Watch was originally published by The Motley Fool
