(Bloomberg) -- Super Micro Computer Inc. shares fell on Tuesday after Hindenburg Research said it’s short the maker of server equipment, which became a tech-market darling as a major beneficiary of the boom in artificial intelligence.

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The stock fell as much as 8.7% after Hindenburg Research’s report, though it pared much of that decline and closed down 2.6%. Hindenburg, the firm run by Nate Anderson, wrote that an investigation into the company revealed “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” Super Micro’s convertible debt also dropped on the news.

A spokesperson for Super Micro said the company “does not comment on rumors and speculation.”

Woo Jin Ho, an analyst at Bloomberg Intelligence, wrote that Hindenburg’s report “could raise greater scrutiny on the server-equipment maker’s accounting practices and customer transactions,” and that while Hindenburg’s concerns aren’t new, they “might intensify the spotlight on client relationships, especially given heightened US scrutiny of AI-systems sales to sanctioned companies and countries.”

In 2020, Super Micro resolved an investigation by the US Securities and Exchange Commission into its accounting and disclosures for its fiscal years 2014-2017 by correcting its financial statements and paying a penalty, while promising not to commit such violations in future.

Super Micro sells high-powered servers for data centers and has seen an explosion of demand over recent quarters amid the growth in AI, making its shares a proxy for enthusiasm in the nascent technology. While the company’s shares have receded more than 50% from a peak of $1,229 in March, they remain up more than 90% for the year.

The company’s stock has risen at least 30% every year starting in 2019, culminating in 2023’s jump of almost 250%. That surge lifted the company’s market capitalization above $32 billion. Earlier this year, the company grew to be the largest single stock weighting the Russell 2000 Index has seen going back to 1999, according to Bloomberg Intelligence, and it was added to the S&P 500 Index in March.

Super Micro’s revenue more than doubled to $14.9 billion in the fiscal year that ended in June, and management said revenue in the current fiscal year will be about $28 billion.

Still, there are concerns about the profitability of AI-optimized servers sold by companies like Super Micro, Dell Technologies Inc., and Hewlett Packard Enterprise Co. Because these servers require expensive chips made by companies like Nvidia Corp., they are generally lower-margin than other products.

Hindenburg Research has also recently targeted Axos Financial Inc., citing its exposure to problematic commercial real estate loans, and Icahn Enterprises LP, a report that led to Carl Icahn and his investment firm agreeing to pay $2 million to settle a probe by the US Securities and Exchange Commission.

Earlier this month, Hindenburg accused the head of India’s market regulator of having conflicts of interest that prevented a thorough examination of manipulation and fraud claims at the Adani Group.

--With assistance from Abhinav Ramnarayan and Dawn McCarty.

(Updates to market close.)

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