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The year 2024 represented the best and worst of times for Super Micro Computer (NASDAQ: SMCI). The server maker started the year with a bang, reporting triple-digit revenue growth, thanks to demand from artificial intelligence (AI) customers. In fact, Supermicro's quarterly revenue this year surpassed annual revenue as recently as 2021. The company also went on to reach other important milestones, such as winning invitations to join the S&P 500 and the Nasdaq 100.
All of this helped Supermicro soar 1,200% in just one year to a high in March. But in recent months, the top equipment maker has faced challenges that have weighed heavily on its stock's performance, which has dropped 70% from its high.
A Hindenburg Research short report alleged troubles at the company. And Supermicro itself disappointed investors, saying it couldn't file its annual and quarterly financial reports on time.
Though Supermicro has offered investors some signs of a turnaround in recent weeks, the company just got another bit of negative news last week: It will be exiting the Nasdaq 100 Index as of Dec. 23. This is part of the index's rebalancing, a time when certain stocks are added or removed.
Considering the positives and negatives of recent weeks, could this beaten-down stock recover in 2025?
Supermicro and Nvidia
First, here's a quick summary of the company's situation. Supermicro's earnings have taken off in recent quarters as AI customers rushed to order servers and full rack scale solutions for their data centers. The company works hand in hand with chip giants like Nvidia to immediately incorporate their innovations in its products. This means that Supermicro can benefit from their new launches, and one in particular could be important -- the production ramp up of Nvidia's Blackwell architecture, happening this quarter.
But the Hindenburg report shook investor confidence, which worsened when Supermicro delayed the filing of its financial reports and its auditor quit. Investors worried about potential financial restatements and a possible delisting from the Nasdaq due to the late reporting. The Nasdaq contacted Supermicro this fall, ordering it to take action or eventually lose its spot on the exchange.
Better news followed. The company hired an auditor and agreed to a reporting timetable to regain Nasdaq compliance, and it's pledged to file reports by Feb. 25. Supermicro also reported findings from an independent review of the company's financial reporting practices, and reviewers found no evidence of fraud. Supermicro said it didn't expect any financial restatements.