Super Micro Computer (SMCI) Shares Tumble Amid Reported Justice Department Probes
Super Micro Computer stock slid sharply following reports that the U.S. Department of Justice is probing whether entities connected to Alice Huang smuggled servers into China.
Shares of Super Micro Computer, Inc. (SMCI) dropped sharply on Thursday, with reports noting declines of more than 11% to 12% during the session before trading around $28.80. The drop followed reports that the U.S. Department of Justice is examining whether entities connected to Alice Huang were engaged in smuggling the company's products into China. According to Bloomberg, the inquiry is directed by the U.S. Attorney's Office in Manhattan, though it remains undetermined if the matter ties into other semiconductor smuggling actions.
A separate report from Semafor indicated that multiple Justice Department inquiries could involve Nvidia, alongside probes touching Super Micro and Megaspeed International. Megaspeed has denied any wrongdoing, and federal officials have not signaled plans to pursue criminal charges against Nvidia. Super Micro is not named as a defendant and previously confirmed it is cooperating with authorities. In a related March case, federal prosecutors charged former Super Micro co-founder Yih Shyan Wally Liaw over an alleged conspiracy to redirect servers to Chinese buyers; Liaw pleaded not guilty, and an internal company review found current executives had no knowledge of the scheme.
Beyond the legal scrutiny, broader fundamental issues weighed on the stock. Analysts noted pressure on unit margins driven by elevated component costs and competition from hardware makers such as Dell Technologies and Hewlett Packard Enterprise. Financial figures also highlighted balance sheet strain, including $434 million burned in operating cash flow, negative free cash flow of $481 million, and inventories climbing to $15.1 billion. Furthermore, research pointed to customer concentration risk, with a single buyer representing 44% of overall revenue.
These headwinds follow Super Micro's fiscal first-quarter earnings report on November 3, 2026. The company reported adjusted earnings of $1.81 per share on revenue of $19.95 billion, exceeding market projections. Management also lifted its fiscal 2027 revenue guidance to a range of $72 billion to $82 billion and projected second-quarter revenue between $19.5 billion and $21.5 billion.
Wall Street opinions remain divided following the updates. Susquehanna maintained a Negative rating while lifting its price target to $18 from $15 on November 10. Bank of America carries an Underperform rating with a $39 target, while Rosenblatt holds a Buy rating with a $57 target. Raymond James recently lifted its price target to $65.