Key Takeaways
- Super Micro Computer shares plummeted approximately 10% Thursday, continuing a period of significant volatility for the AI server company.
- Research firm BlueFin reported Oracle abandoned plans to purchase 300–400 AI server racks valued at $1.1–$1.4 billion from Super Micro.
- Company co-founder Yih-Shyan “Wally” Liaw is under federal indictment for allegedly smuggling controlled Nvidia processors to China.
- Class action litigation claims involvement in a $2.5 billion operation funneling restricted GPU servers to Chinese organizations.
- Second quarter fiscal 2026 revenue reached $12.68 billion, surpassing projections by 23%, while yearly guidance increased to $40 billion.
Thursday proved punishing for Super Micro Computer investors. Shares plunged roughly 10% during morning sessions, tumbling from Wednesday’s closing price of $29.18 down to $26.07 at its lowest point. The decline proved especially painful following a month that saw shares rally 35%, creating vulnerability to negative developments.
Super Micro Computer, Inc., SMCI
The negative developments arrived swiftly.
BlueFin Research, an independent analysis firm, disclosed that Oracle has terminated its intention to acquire 300 to 400 AI server rack systems from Super Micro. These racks, equipped with Nvidia processors, command approximately $3.5 million per unit. The abandoned agreement represents between $1.1 billion and $1.4 billion in forfeited revenue.
Industry insiders indicate Oracle is shifting this substantial order to competitors such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle’s shares likewise declined early in trading as the market assessed potential setbacks to its cloud infrastructure ambitions.
Mounting Legal Challenges
The canceled contract arrives amid escalating legal difficulties. Federal prosecutors have indicted company co-founder Yih-Shyan “Wally” Liaw on allegations of participating in an operation to export controlled Nvidia processors to China. Liaw pleaded not guilty during a New York court appearance earlier this month.
Multiple legal firms have initiated class action proceedings targeting the company. Both Levi & Korsinsky and Faruqi & Faruqi cite an alleged $2.5 billion unlawful server distribution operation wherein restricted Nvidia GPU systems were channeled to China-based organizations. The class action period spans April 30, 2024 through March 19, 2026, with May 26 established as the lead plaintiff deadline.
An earlier Department of Justice indictment involving three company-affiliated individuals previously triggered a 33% stock decline.
JPMorgan responded by reducing its SMCI price objective from $40 to $28, maintaining a neutral stance.
BlueFin additionally noted surplus inventory of previous-generation GPU products proving difficult to liquidate. This inventory concern compounds existing legal complications.
Revenue Strength Masks Margin Deterioration
The operational picture presents contrasts. Super Micro’s second quarter fiscal 2026 performance, announced February 3, demonstrated impressive revenue generation. Sales totaled $12.68 billion, substantially exceeding the $10.34 billion forecast and marking 123% annual growth.
Non-GAAP earnings reached $0.69 per share versus $0.49 expectations — a 41% outperformance. Leadership increased full fiscal year 2026 revenue projections to a minimum $40 billion, elevated from the prior $36 billion target. CEO Charles Liang highlighted exceeding $13 billion in Blackwell Ultra commitments.
However, GAAP gross margin contracted to 6%, declining from 12% in the comparable year-earlier period. This divergence between revenue expansion and margin deterioration continues drawing analyst scrutiny.
Current analyst consensus includes 5 Buy ratings, 9 Hold ratings, and 4 Sell ratings, with an average price target of $33.20.
The company’s next major event is third quarter fiscal 2026 earnings, currently projected for May 5.
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