Key Takeaways
- Super Micro Computer shares tumbled approximately 10% Thursday, continuing a turbulent period for the server manufacturer.
- Research firm BlueFin reported Oracle abandoned plans to acquire 300–400 AI server racks from Super Micro, representing $1.1–$1.4 billion in lost revenue.
- Company co-founder Yih-Shyan “Wally” Liaw is under federal indictment for allegedly smuggling controlled Nvidia processors to Chinese entities.
- Class action litigation claims the company orchestrated a $2.5 billion operation to export banned GPU servers to China.
- The company’s Q2 FY2026 revenue reached $12.68 billion, surpassing forecasts by 23%, with annual guidance elevated to $40 billion.
Super Micro Computer endured a punishing trading session Thursday. Shares declined roughly 10% during morning hours, dropping from the previous day’s closing price of $29.18 to a low of $26.07. The selloff followed a month-long rally that had pushed the stock up 35%, leaving investors vulnerable to negative developments.
Super Micro Computer, Inc., SMCI
The negative catalysts arrived swiftly.
According to BlueFin Research, an independent analytics firm, Oracle has terminated its agreement to acquire between 300 and 400 artificial intelligence server racks from Super Micro. These Nvidia chip-equipped racks command approximately $3.5 million each. The cancelled transaction represents between $1.1 billion and $1.4 billion in forfeited business.
Industry sources indicate Oracle is shifting the order to competing suppliers such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle shares also experienced early session declines as the market assessed potential setbacks to its cloud infrastructure buildout.
Mounting Legal Pressure
The cancelled contract arrives amid escalating legal difficulties. Federal prosecutors have indicted company co-founder Yih-Shyan “Wally” Liaw on charges related to illegally exporting restricted Nvidia processors to China. Liaw maintained his innocence during a New York court appearance earlier this month.
Multiple law firms have initiated class action proceedings against Super Micro. Both Levi & Korsinsky and Faruqi & Faruqi reference allegations of a $2.5 billion unlawful operation involving the transfer of restricted Nvidia GPU servers to Chinese customers. The proposed class period spans from April 30, 2024 through March 19, 2026, with plaintiffs required to step forward by May 26.
A previous Department of Justice indictment involving three company-affiliated individuals triggered a 33% stock decline.
JPMorgan recently lowered its SMCI price objective to $28 from $40 while maintaining a neutral stance.
BlueFin additionally highlighted surplus inventory of legacy GPU models creating distribution challenges. This inventory concern compounds existing legal headwinds.
Revenue Strength Masks Margin Deterioration
Despite current challenges, Super Micro’s fundamental performance shows resilience. The company’s Q2 FY2026 financial results, released February 3, demonstrated impressive topline expansion. Revenue totaled $12.68 billion, significantly exceeding the $10.34 billion analyst consensus and representing 123% year-over-year growth.
Non-GAAP earnings per share reached $0.69, beating the $0.49 estimate by 41%. Leadership increased full-year FY2026 revenue projections to a minimum of $40 billion from the prior $36 billion target. CEO Charles Liang highlighted more than $13 billion in Blackwell Ultra commitments.
However, GAAP gross margin deteriorated to 6%, compared with 12% in the prior-year period. This divergence between revenue acceleration and margin contraction remains a focal point for market analysts.
Wall Street opinion is divided: 5 Buy recommendations, 9 Hold ratings, and 4 Sell ratings, producing a consensus price target of $33.20.
The company’s next major event will be Q3 FY2026 earnings, anticipated for May 5.
