Super Micro Computer Faces Possible Nasdaq 100 Removal: Can xAI and Nvidia Provide Stability?

Super Micro Computer Inc. (SMCI) is currently navigating a precarious situation, with its position on the Nasdaq 100 Index at risk. This week is crucial for the San Jose-based company as the index prepares for its annual review, which takes place every December. Super Micro is now under scrutiny, alongside other struggling stocks, such as Moderna Inc. (MRNA) and Biogen Inc. (BIIB).

The company initially flourished due to the increasing demand for artificial intelligence infrastructure, and its market capitalization once soared to $67 billion. However, a recent auditing scandal has caused a significant drop in its value, bringing the current market cap to just below $20.4 billion.

Concerns arose after Ernst & Young, a prominent auditing firm, raised flags about governance issues within Super Micro, creating worry among investors. Fortunately, a special committee later found insufficient evidence to support these claims.

During the Reuters NEXT conference, Super Micro's CEO Charles Liang conveyed optimism, assuring stakeholders that the company would adhere to its financial filing deadlines and aims for a resolution in February.

Liang also highlighted Super Micro's strong partnerships with significant clients such as xAI and Nvidia Corp. (NVDA), suggesting these relationships could help stabilize the company’s outlook moving forward.

Technical Analysis of Super Micro's Stock

Despite these reassurances from the CEO, the technical analysis presents a mixed picture. As of now, Super Micro's stock is trading at $37.95, which is below its eight-day simple moving average (SMA) of $41.47. This indicates short-term selling pressure. In contrast, its 20-day SMA of $33.38 and 50-day SMA of $37.10 suggest some medium-term resilience, providing a glimmer of hope for investors.

On the other hand, the long-term outlook is concerning, as evidenced by the 200-day SMA at $67.21, underscoring the significant decline the stock has experienced.

JPMorgan's Perspective

Amid growing skepticism in the market, JPMorgan maintains a more favorable view on Super Micro's order book and customer base. The firm reports a "robust" order intake with no indications of customer attrition. With Nvidia's Blackwell product line poised for a major rollout in late fiscal 2025, Super Micro’s role within the AI infrastructure sector may prove critical.

The Outlook

As Super Micro strives to retain its spot on the Nasdaq 100, the impending decision on Friday will likely depend on its market value in comparison to stronger competitors like Palantir Technologies Inc. (PLTR) and MicroStrategy Inc. (MSTR). Time is of the essence for SMCI to demonstrate that it deserves to remain part of the tech elite.

Investors should stay alert, as Friday the 13th could signify a pivotal moment for this embattled leader in AI infrastructure.

SuperMicro, Nasdaq, Nvidia