SMCI Shares Soar 15.1% Amid Auditor Appointment and Regulatory Resolution

Super Micro Computer (SMCI, Financial) stock price rose by 15.1% to $29.70 on November 21, 2024, following a series of significant developments. This marked a remarkable recovery and restored investor confidence despite ongoing controversies.

• Warning! GuruFocus has detected 5 Warning Signs with SMCI.

The recent surge is coming into the market after SMCI cleared all the compliance issues between it and Nasdaq by appointing BDO USA as their new auditors. This action comes after a somewhat volatile time for the company, which saw its financial reports delayed and the ouster of its prior auditor, Ernst & Young. The appointment of BDO, the fifth largest accounting firm globally, alongside presenting a compliance plan, helped the company put off immediate wipe-out risks, which was a significant achievement in stabilization.

The semiconductor industry has received further support from Nvidia's (NVDA, Financial) Q3, FY 2025 results, which depict a healthy demand for AI. Nvidia's results reflected strong revenue and earnings growth and placed a favorable spotlight on system partners such as SMCI. Although Nvidia shares declined on profit selling, the prolonged favorable industry fundamentals and the increase continued driving up the SMCI shares.

However, coupled with these developments are some challenges that Super Micros is experiencing, some of which are the accounting fraud allegations made by Hindenburg research early this year. The ability of the company to address these issues while sustaining solid linkages is likely to continue to be an area of interest to investors.