Super Micro Computer (SMCI) Stock Plunges 65%: Why Investors Are Fleeing

Key Takeaways

Table of Contents

Wally Liaw, co-founder of Super Micro Computer, faces indictment charges related to allegedly evading US export controls to China, sparking renewed sell-offs.
Institutional investors like Tortoise Capital have completely divested their SMCI holdings, while Zacks Investment Management labels the stock “uninvestable.”
Shares have plummeted approximately 65% from the July 30, 2024 near-term high of $60.71, with year-to-date 2026 losses reaching 27%.
Current valuation sits at roughly 7x forward earnings — significantly below the historical 10-year average of 12x — while Wall Street maintains a “Hold” rating.
Despite the exodus, certain investors maintain cautious optimism, pointing to SMCI’s critical role in AI infrastructure and forecasted fiscal 2026 revenues exceeding $40 billion.

Super Micro Computer’s journey over the past twelve months reads like a cautionary tale in the tech sector. The server manufacturer occupies a strategic position within the AI infrastructure revolution, equipping data centers with essential hardware for processing large-scale artificial intelligence operations. With Nvidia deriving approximately 10% of its total revenue from Super Micro, the partnership appears significant. Nevertheless, the company continues to encounter serious headwinds.

Super Micro Computer, Inc., SMCI

The most recent setback emerged when Yih-Shyan “Wally” Liaw, the company’s co-founder, faced formal indictment on allegations of skirting US export control regulations concerning China. Following the charges, Liaw stepped down from his position, while the organization has stated its full cooperation with investigating authorities. Notably, CEO Charles Liang and the corporation itself were excluded from the defendant list. Through a March 26 correspondence, Liang highlighted newly implemented oversight protocols and announced the designation of a new acting chief compliance officer.

Market participants, however, showed little confidence in these reassurances. Tortoise Capital completely liquidated its SMCI holdings from the Tortoise AI Infrastructure ETF during the previous week. “The indictment was basically the driving factor behind us getting out,” explained Rob Thummel, senior portfolio manager.

Zacks Investment Management, having already eliminated its position during 2025, expressed even stronger reservations. “In our view this is an uninvestable stock,” stated Brian Mulberry, chief market strategist. “Especially since the C-suite is involved, we would sit this out for the foreseeable future.”

A History of Compliance Issues

This scenario represents familiar territory for Super Micro. Back in 2019, the company missed critical filing deadlines, resulting in Nasdaq delisting. Reinstatement occurred in 2020. More recently, throughout the previous year, the firm faced pressure to submit overdue financial documentation to prevent another potential delisting and preserve its S&P 500 inclusion.

The stock experienced an extraordinary rally during 2023 and into early 2024 as AI infrastructure investment accelerated, reaching an all-time peak of $118.81 in March 2024. From its near-term summit of approximately $60.71 on July 30, 2024, shares have declined roughly 65% — establishing it as the second-worst performing stock in the S&P 500 throughout this timeframe.

Analyst perspectives have undergone a noticeable transformation. When 2026 began, 10 out of 23 monitored analysts maintained buy recommendations. Currently, that figure has contracted to six, while sell ratings have climbed from three to five. Wall Street’s collective stance now registers as a Hold, featuring an average price projection of $31.70 — suggesting approximately 47% potential upside from present trading levels.

Remaining Optimists Hold Their Ground

Yet not all market participants are abandoning ship. Gabelli Funds continues maintaining SMCI within its Gabelli Global Technology Leaders ETF portfolio. Portfolio manager Hendi Susanto emphasizes the company’s standing among the select group of major AI server suppliers and a forward earnings multiple hovering just above 7x — substantially beneath its decade-long average of 12x and the S&P 500’s approximately 19x multiple.

Louis Navellier from Navellier & Associates, a longstanding shareholder, interprets Liaw’s exit as ultimately beneficial. “The fact that he’s gone I think helps, and they’re apparently cooperating with the DOJ, which is great,” he commented.

Super Micro projects revenue generation surpassing $40 billion during fiscal 2026, representing an 87% increase compared to the previous fiscal year. Bloomberg Intelligence analyst Woo Jin Ho observed that while short-term sales performance likely remains on track, the indictment “could drive customers to seek more supplier diversity, pressuring 2027 revenue.”

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