Key Takeaways
- Super Micro Computer (SMCI) shares plummeted approximately 10% during Thursday’s session, continuing the company’s turbulent period.
- Research firm BlueFin reported that Oracle terminated an order for 300–400 AI server racks valued between $1.1 billion and $1.4 billion.
- Co-founder Yih-Shyan “Wally” Liaw is under federal indictment for allegedly smuggling export-controlled Nvidia chips to Chinese entities.
- Class action litigation claims Super Micro participated in a $2.5 billion scheme to illegally ship restricted GPU servers to China.
- The company’s second quarter fiscal 2026 revenue reached $12.68 billion, surpassing Wall Street projections by 23%, with annual guidance increased to $40 billion.
Thursday proved brutal for Super Micro Computer investors. Shares collapsed roughly 10% during morning hours, declining from the previous session’s $29.18 close to a low of $26.07. The selloff came on the heels of a strong month that saw the stock appreciate 35%, making it particularly vulnerable to negative developments.
Super Micro Computer, Inc., SMCI
The negative catalysts arrived in rapid succession.
According to research house BlueFin Research, Oracle has terminated its commitment to acquire 300 to 400 AI server racks from Super Micro. With each Nvidia-powered rack valued at approximately $3.5 million, the cancelled transaction represents between $1.1 billion and $1.4 billion in lost revenue.
Industry sources indicate Oracle is reallocating this substantial order to competitors such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle’s shares also declined in early trading as the market absorbed the implications for its cloud infrastructure buildout.
Mounting Legal Challenges
This contract cancellation doesn’t exist in isolation. The development follows criminal charges filed against co-founder Yih-Shyan “Wally” Liaw, who faces accusations of participating in a conspiracy to illegally export controlled Nvidia processors to China. Liaw formally pleaded not guilty during a New York court appearance this month.
Multiple law firms have initiated class action proceedings against Super Micro. Legal teams from Levi & Korsinsky and Faruqi & Faruqi cite allegations of a $2.5 billion illegal operation that funneled restricted Nvidia GPU servers to Chinese buyers. The proposed class period spans April 30, 2024 through March 19, 2026, with May 26 designated as the deadline for lead plaintiff motions.
An earlier Justice Department indictment involving three individuals connected to the company previously triggered a 33% stock decline.
JPMorgan responded by reducing its SMCI price objective from $40 to $28 while maintaining a neutral stance.
BlueFin Research additionally highlighted accumulating inventory of legacy GPU models that are proving difficult to liquidate, compounding concerns beyond the legal challenges.
Revenue Strength Masks Margin Deterioration
The operational picture contains some bright spots. Super Micro’s second quarter fiscal 2026 performance, announced February 3, demonstrated impressive topline momentum. Revenue totaled $12.68 billion, significantly exceeding the $10.34 billion Street consensus and representing 123% year-over-year expansion.
Non-GAAP earnings per share of $0.69 crushed the $0.49 estimate, delivering a 41% upside surprise. The company elevated its full-year fiscal 2026 revenue outlook to a minimum of $40 billion from the prior $36 billion target. CEO Charles Liang highlighted more than $13 billion in Blackwell Ultra product orders.
However, GAAP gross margin deteriorated sharply to 6%, down from 12% in the comparable prior-year period. This disconnect between revenue acceleration and profitability metrics remains a focal point for Wall Street.
Current analyst coverage shows a divided outlook: 5 Buy recommendations, 9 Hold ratings, and 4 Sell calls, producing a consensus price target of $33.20.
Investors will await the company’s third quarter fiscal 2026 earnings report, tentatively scheduled for May 5.
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