Super Micro Computer is back in the spotlight again, with a red flag.
Shares of Super Micro Computer (SMCI) fell 5.5% on Aug. 29 after the AI server maker cautioned in its annual SEC filing that weaknesses in its controls related to financial disclosures may, if unaddressed, hamper its ability to deliver timely and accurate results.
“We have identified material weaknesses in our internal control over financial reporting, which could, if not remediated, adversely affect our ability to report our financial condition and results of operations in a timely and accurate manner,” said Super Micro.
The company confirmed that “internal control over financial reporting was not effective as of June 30, 2025, due to the existence of material weaknesses in such controls.”
Super Micro said it has begun remediation efforts, but cautioned that it cannot guarantee these measures will fully resolve the issues.
“We also cannot assure you that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future,” the company said.
Super Micro’s history of red flags
This is not a new red flag to the market. About a year ago, Super Micro said it would delay filing its 10-K for the fiscal year ended June 30.
The announcement came just a day following short-seller Hindenburg Research released a report accusing the company of “glaring accounting red flags, evidence of undisclosed related-party transactions, sanctions violations, and customer troubles.”
Related: Analysts tweak Super Micro stock price targets after earnings
Last October, Super Micro's then-auditor, Ernst & Young, resigned, citing governance and transparency concerns. Super Micro's special committee of the board later said it found “no evidence of misconduct” after an investigation.
In December, Super Micro was dropped from the Nasdaq 100 Index, and in February, the company reported its financial results just in time to meet the Nasdaq’s listing deadline.
Super Micro stock falls on disappointing outlook
Super Micro's stock fell sharply in August, especially after it missed Wall Street's fourth-quarter earnings expectations and fell short of first-quarter forecasts.
The company reported adjusted earnings of 41 cents per share, missing Wall Street’s expectation of 44 cents. Revenue reached $5.76 billion, below the $5.89 billion analysts had projected.
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The shortfall was partly due to U.S. tariffs on imported goods. “Although we have taken measures to reduce the impact and we will see the results,” CEO Charles Liang said.
For the fiscal first quarter, Super Micro expects adjusted earnings of 40 to 52 cents per share on revenue between $6 billion and $7 billion. That’s short of analysts’ forecasts of 59 cents per share and $6.6 billion in revenue.
The stock tumbled more than 18% on Aug. 6, a day after the earnings date. Over the past month, the stock is down nearly 30%, but it still managed to gain 36% year-to-date at last check.
J.P. Morgan analyst Samik Chatterjee cut his price target on Super Micro to $45 from $46 with a neutral rating on the stock following the earnings, The Fly reported.
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Chatterjee said the company’s fiscal fourth-quarter results fell short of expectations because of capital constraints and customer hesitation.
He added that the quarter was another example of Super Micro's execution falling short of management's targets.
Super Micro stock closed at $41.54 on Aug. 29.
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