TLDR
- SMCI stock dropped roughly 10% on Thursday, extending a volatile stretch for the AI server maker.
- BlueFin Research reported Oracle scrapped a deal to buy 300–400 AI racks from Super Micro, worth $1.1–$1.4 billion.
- Co-founder Wally Liaw faces a federal indictment over alleged smuggling of restricted Nvidia chips to China.
- Multiple class action lawsuits allege a $2.5 billion scheme routing restricted GPU servers to China-based entities.
- Despite the selloff, Q2 FY2026 revenue of $12.68 billion beat estimates by 23%, with full-year guidance raised to $40 billion.
Super Micro Computer had a rough Thursday. The stock fell around 10% in morning trading, sliding from Wednesday’s close of $29.18 to as low as $26.07. That came after a month where the stock had climbed 35%, leaving little room for bad news.
Super Micro Computer, Inc., SMCI
And the bad news came fast.
Independent research firm BlueFin Research reported that Oracle has canceled plans to purchase between 300 and 400 AI server racks from Super Micro. Each rack, powered by Nvidia chips, carries an estimated price tag of around $3.5 million. The total value of the lost deal is estimated between $1.1 billion and $1.4 billion.
Market sources suggest Oracle is redirecting that business to rivals including Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle’s own stock also dropped in early trading as investors weighed disruption to its cloud expansion plans.
Legal Cloud Grows Heavier
The contract loss isn’t happening in a vacuum. It follows a federal indictment against co-founder Yih-Shyan “Wally” Liaw, who is accused of involvement in a scheme to export restricted Nvidia chips to China. Liaw entered a not-guilty plea in a New York courtroom earlier this month.
Several law firms have filed class action suits against the company. Levi & Korsinsky and Faruqi & Faruqi both reference an alleged $2.5 billion illegal server diversion scheme in which restricted Nvidia GPU servers were routed to China-based entities. The class period runs from April 30, 2024 through March 19, 2026, with a lead plaintiff deadline of May 26.
A prior DOJ indictment involving three individuals tied to the company previously sent the stock down 33%.
JPMorgan has since cut its price target on SMCI to $28 from $40, keeping a neutral rating.
BlueFin also flagged excess inventory of older GPU models that are becoming harder to move. That adds another layer of concern on top of the legal issues.
Earnings Were Strong — But Margins Tell a Different Story
It’s not all bad on the fundamentals side. Super Micro’s Q2 FY2026 results, reported February 3, were strong on the top line. Revenue came in at $12.68 billion, well above the $10.34 billion estimate, and up 123% year over year.
Non-GAAP earnings per share hit $0.69 against a $0.49 consensus — a 41% beat. Management raised full-year FY2026 revenue guidance to at least $40 billion, up from $36 billion. CEO Charles Liang cited over $13 billion in Blackwell Ultra orders.
But GAAP gross margin compressed to 6%, down from 12% a year earlier. That gap between revenue growth and margin health is something analysts haven’t stopped watching.
Analyst sentiment reflects the split: 5 Buy, 9 Hold, 4 Sell ratings, with a consensus price target of $33.20.
The next scheduled catalyst is Q3 FY2026 earnings, estimated for May 5.
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