In the midst of turmoil, a leading AI hardware manufacturer has made a stunning comeback. Despite facing a double whammy of a short-seller probe and a reported Department of Justice investigation, the company’s stock surged over 20% in a single day after announcing a significant ramp-up in GPU shipments. Although the stock has since retreated, it remains nearly 10% higher than its starting point for the week.
The AI sector’s meteoric rise has sparked a frenzy of investment, with billions of dollars pouring into private companies and driving up demand for related stocks. This phenomenon has benefited even companies like Super Micro, which has faced its fair share of challenges in recent times. Founded in 1993, Super Micro specializes in producing high-performance servers and storage systems for various industries, including data centers and 5G networks.
The company’s fortunes took a dramatic turn with the launch of OpenAI’s ChatGPT in November 2022. Its stock price skyrocketed from around $8 at the start of 2023 to a peak of $114 in March 2024. However, Super Micro’s troubles began long before the short-seller investigation. In 2018, a Bloomberg report alleged that Chinese officials had installed a backdoor into the company’s servers, and in 2020, it settled with the Securities and Exchange Commission over accounting practice violations.
The recent short-seller report reignited concerns about the company’s practices, accusing it of “accounting manipulation” and pushing salespeople to ship defective products. The company’s stock plummeted 26% in response. However, Super Micro has since assured customers and partners that the controversy will not impact its products.
In a surprise move, the company announced that it would be shipping 100,000 GPUs per quarter, sending its stock soaring. This development has overshadowed the ongoing scrutiny, including a reported Justice Department investigation and two class-action lawsuits alleging that the company misled investors. Despite these challenges, Super Micro’s recent success reflects the enduring appeal of AI-related stocks, even in the face of uncertainty.
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