Despite strong Q2 2025 financial results and a positive outlook, Super Micro Computer has failed to restore investor confidence. Its shares continue to lose value.
Super Micro Computer, Inc. (NASDAQ: SMCI) released its Q2 2025 financial report in February, avoiding a potential delisting from NASDAQ. However, despite strong financial performance and a positive outlook, the company’s shares have fallen in value, signalling a loss of investor confidence.
This article analyses Super Micro Computer, Inc., outlining its revenue sources, reviewing its Q2 2025 financial performance, and presenting expectations for the 2025 calendar year. Additionally, it includes a technical analysis of SMCI, forming the basis for the Super Micro Computer stock price forecast for 2025.
Super Micro Computer was founded in 1993 by Charles Liang. The company designs and manufactures server hardware, including motherboards, servers, data storage solutions, GPU systems, and other computing technologies. With proprietary manufacturing facilities in the Netherlands, the US, and Taiwan, it can tailor its products to the specific demands of different markets.
Super Micro employs a modular approach to deliver customised solutions for data centres, cloud services, and enterprise clients. The company went public on 29 March 2007, listing on the NASDAQ under the ticker SMCI.
Super Micro Computer, Inc.’s primary revenue streams
Super Micro Computer generates revenue from the following sources:
- Server systems – the largest revenue segment, which includes:
- Rackmount servers – high-performance servers designed for data centres, cloud computing, and AI workloads
- GPU-optimised systems – servers built for artificial intelligence (AI), machine learning, and deep learning applications
- Blade and multi-module servers – high-density solutions for enterprises and hyperscale environments
- Data storage systems – this segment includes all-flash and hybrid storage solutions, as well as software-defined storage (SDS) architectures
- Embedded and IoT systems – encompasses revenue from industrial and edge computing products, including IoT and edge servers used in smart cities, automation, and real-time data processing. It also includes industrial computing solutions for healthcare, telecommunications, and manufacturing
- Networking and power technologies – this segment comprises:
- High-performance networking equipment – Ethernet switches, network adapters, and interconnects for data centres
- Power supply units (PSUs) and cooling systems – modular, energy-efficient, and redundant power supplies, along with air and liquid cooling solutions
- Components and accessories – revenue from individual hardware components, such as motherboards, chassis, processors, memory, storage devices, and accelerators
Super Micro’s business model is centred on modular and customisable computing systems catering to enterprises, cloud providers, and the artificial intelligence industry.
Threat of delisting for Super Micro Computer, Inc. on NASDAQ
Super Micro Computer faced serious issues related to accounting practices and corporate governance, which led to the threat of its delisting from the NASDAQ exchange. Between 2014 and 2017, the company committed violations in revenue and expense reporting, prompting an investigation by the U.S. Securities and Exchange Commission (SEC). In 2020, the SEC determined that the company and its former Chief Financial Officer had engaged in accounting violations, resulting in a settlement where Super Micro agreed to pay a fine of 17.50 million USD.
In 2018, Super Micro was temporarily removed from the NASDAQ listing due to delays in submitting its financial reports. The company failed to publish up-to-date financial data for nearly two years, causing concern among investors and regulators.
In 2024, the company was once again embroiled in controversy following a report by Hindenburg Research. The report claimed that Super Micro was involved in questionable accounting practices and was linked to suppliers controlled by its CEO’s relatives. These accusations raised new doubts about the transparency of the company’s financial reporting.
An additional blow came when Super Micro decided to delay filing its annual report for the 2024 fiscal year, leading to a warning from NASDAQ about the possibility of delisting. The situation worsened in October 2024 when the auditing firm Ernst & Young declined to continue working with Super Micro, citing issues with internal controls, corporate governance, and potential violations of accounting practices. The auditor’s departure further exacerbated investor suspicions, contributing to the company’s stock price decline.
In response to the crisis, Super Micro’s Board of Directors established a special independent committee to investigate the allegations made by Ernst & Young and Hindenburg Research. In December 2024, the committee concluded its investigation, stating that there was no evidence of fraud or misconduct by the company’s management. Following this, NASDAQ granted Super Micro an extension until February 2025 to address its violations and submit all required reports.
Super Micro successfully avoided delisting by submitting a compliance restoration plan and appointing a new auditor, BDO USA. NASDAQ granted the company an extension until 25 February 2025 to submit the 10-K and 10-Q reports for the quarters ending 30 September and 31 December 2024. The company submitted all the required documents by the 25 February deadline, restoring its compliance with NASDAQ’s requirements and maintaining its listing. As a result, the delisting did not occur, but the episode highlighted serious issues with the company’s internal processes and eroded investor confidence.
Super Micro Computer, Inc. Q2 2025 financial report
On 25 February, amid the threat of delisting, Super Micro Computer released its Q2 2025 financial report for the period ending 31 December 2024. Below are the key figures:
- Revenue: 5.68 billion US dollars (+54%)
- Net profit: 320.59 million US dollars (+8%)
- Earnings per share: 0.51 US dollars (unchanged)
- Gross profit: 670.02 million US dollars (+18%)
Charles Liang, Chair and CEO of Super Micro, described Q2 FY2025 as relatively strong despite challenges, highlighting a 54% year-on-year revenue increase. This growth was driven by robust demand for AI solutions from both existing and new customers. He acknowledged certain obstacles, including cash flow pressures and market concerns over the delayed financial report submission. Liang identified the transition from Nvidia Hopper to Blackwell GPUs as a key growth factor, with supply expected to increase in the current quarter (Q3 FY2025).
CFO David Weigand provided further details, noting that gross margin stood at approximately 11.9%, down from 13.1% in Q1 FY2025, due to changes in product mix and customer base. He emphasised that AI-related platforms accounted for over 70% of revenue, reinforcing the company’s strong position in the enterprise and cloud provider markets.
For Q3 FY2025, ending 31 March 2025, the company projects revenue in the range of 5.00-6.00 billion US dollars, signalling continued growth, though at a more moderate pace due to competitive dynamics in the AI server market.
Charles Liang has set an ambitious target of 40.00 billion US dollars in revenue by early FY2026, citing underutilised production capacity in Malaysia, the US, and Taiwan. He underscored Super Micro’s leadership in direct liquid cooling (DLC) technology, forecasting that over 30% of new data centres globally will adopt this technology within 12 months, positioning SMCI as a key player in this transition. Liang also highlighted plans to expand manufacturing in Europe, the US, and Taiwan to meet growing demand, particularly for AI infrastructure solutions.
Expert forecasts for Super Micro Computer, Inc. stock
- Barchart: three out of 14 analysts rated Super Micro Computer stock as a Strong Buy, two as a Moderate Buy, seven as Hold, and two as Strong Sell. The highest target price for upside potential is 100 US dollars, while the lowest target price for selling is 15 US dollars
- MarketBeat: six out of 18 experts assigned a Buy rating, 10 recommended Hold, and two rated it as Sell. The highest target price for upside potential is 93 US dollars, while the lowest target price for selling is 33 US dollars
- TipRanks: four out of 10 surveyed analysts rated the stock as Buy, four recommended Hold, and two rated it as Sell. The highest target price for upside potential is 70 US dollars, while the lowest target price for selling is 15 US dollars
- Stock Analysis: four out of 17 experts rated the stock as a Strong Buy, one as Buy, ten as Hold, and two as Sell. The highest target price for upside potential is 130 US dollars, while the lowest target price for selling is 33 US dollars
Super Micro Computer, Inc. stock price forecast for 2025
Since its peak in March 2024, Super Micro Computer stock has lost 67% of its value, with a maximum decline of 86%. Few companies have managed to avoid bankruptcy or acquisition after such a significant drop in share price. As of March 2025, the stock remains within a downward channel, and in February, its price rebounded from the trendline, which is acting as resistance. Given the current Super Micro Computer stock performance, let’s explore potential movements in 2025.
The base-case forecast for Super Micro Computer shares anticipates a further decline within the downward channel towards support at 23 US dollars. A breakout below this level could act as a catalyst for a deeper drop to 12 US dollars. Under such circumstances, an acquisition of the company cannot be ruled out, which could, in turn, positively impact its stock price.
The alternative Super Micro Computer stock forecast suggests a breakout above resistance at 50 US dollars. In this scenario, the stock price could rise to 70 US dollars. However, for this to happen, the company must regain investor confidence, which has been undermined by delays in financial reporting, disputes with auditors, and a delisting warning from NASDAQ.
Super Micro Computer, Inc. stock analysis and forecast for 2025
Risks of investing in Super Micro Computer, Inc. stock
Investing in Super Micro Computer stock carries several factors that could negatively impact the company’s revenue and profits, ultimately affecting investor returns:
- Accounting issues: SMCI has a history of delays in financial reporting, including restatements and a fine of 17.50 million US dollars imposed by the SEC in 2020 for serious accounting violations
- Dependence on major clients: a significant portion of SMCI’s revenue comes from a few key customers. Recent financial reports indicate that one of its largest clients accounted for approximately 22% of total revenue. Such high dependency poses risks, especially if these clients significantly reduce their order volumes
- Increasing competition: the AI server market is becoming increasingly competitive. Companies like Dell Technologies (NYSE: DELL) and Wistron Corp. are actively developing similar solutions, which could lead to a decline in SMCI’s market share and put pressure on its profit margins
- Financial difficulties and cash flow constraints: despite revenue growth, SMCI has historically reported negative free cash flow. Working capital requirements have increased, and the company’s reliance on debt has grown, indicating potential financial challenges ahead
- Stock sales by executives: recent large-scale stock sales by SMCI’s CEO and CFO have raised investor concerns about the company’s future prospects
Summary
Super Micro Computer’s Q2 2025 financial results indicate the company’s resilient position, though concerns remain over its low profit margins. While the delayed submission of financial reports has allowed the company to address NASDAQ compliance issues and stabilise corporate governance concerns, lingering investor scepticism due to past reporting irregularities continues to weigh on the stock’s growth potential.
To sustain revenue growth this year, SMCI could leverage its direct liquid cooling technology leadership, aligning with the industry’s shift towards energy-efficient data centres. This innovation provides a competitive edge as adoption increases. Expanding manufacturing capacity in key regions –
Malaysia, the US, and Taiwan – should help meet rising demand, particularly as next-generation GPUs like Nvidia’s Blackwell become more widely available.
Overall, the company has growth potential, but its reputation has been significantly damaged. Beyond delivering strong results, Super Micro Computer must now work to rebuild investor trust.
Source: Roboforex
