Will Super Micro Computer Soar After Feb. 11?

Super Micro Computer (NASDAQ: SMCI) has delivered both ups and downs to investors over the past year. The maker of servers and workstations has benefited from artificial intelligence (AI) demand as data centers expand and launch upgrades -- and early last year that led to triple-digit revenue growth and outstanding stock performance.

The shares surged 188% in the first half of the year, even beating market giant Nvidia. But questions about the company's financial reporting halted the momentum -- a short-seller's report from Hindenburg Research alleged "glaring accounting red flags." And Supermicro's announcement that it would file its 10-K annual report late added to the worries, sending the shares into a downward spiral.

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But brighter days may be ahead for Supermicro. The company recently reported positive news, including findings by a special committee that looked into its reporting practices. The committee found no evidence of misconduct and no need for a restatement of reported financials. And, now, Supermicro has a new catalyst right around the corner, on Feb. 11, when it is scheduled to give a "business update." Will the stock soar after that date? Investing success is about much more than short-term stock moves, but let's gather some clues.

Image source: Getty Images.

Supermicro's growth story

First, let's consider Supermicro's story so far -- from the best moments to the troubles in the second half of last year. Supermicro has been around for more than 30 years, providing equipment for companies and data centers, but it saw revenue truly take off over the past couple of years as the need for AI equipment surged.

Supermicro became a leader thanks to its ability to quickly tailor a system to each individual customer's needs and include the very latest innovations from partners. The company is able to do this because its systems contain many similar parts, streamlining the customization process. And Supermicro works hand-in-hand with Nvidia and other top chip designers to immediately integrate their newest launches into its platforms.

All of this helped Supermicro to report its first quarter of more than $3 billion in revenue early last year, surpassing its 2021 annual revenue. Supermicro's shares climbed so high that it announced a stock split, completed in the fall, to make them more accessible to a broader range of investors. And the S&P 500 invited the company to join, signaling it had become one of the major companies powering growth today.

However, as mentioned, concerns about Supermicro's financial reporting halted the stock's momentum. And the company's delay in filing its 10-K and a few weeks later a 10-Q quarterly report prompted the Nasdaq to send it a non-compliance letter. The risk was a delisting, but since then, Supermicro and the Nasdaq have agreed to a new deadline for the reports, and that's coming up later this month.

Finally, the company said in early December that the special committee that reviewed Supermicro's reporting practices found "that there was no evidence of fraud or misconduct on the part of management or the board of directors."

What's happening on Feb. 11?

Now, let's consider what's happening on Feb. 11. Supermicro says it will provide a second-quarter fiscal 2025 business update. Investors should be on the lookout for a couple of key themes.

First, any comments on growth in direct liquid cooling (DLC) orders -- an area of great potential for the company -- should be on your radar screen. DLC solves one of the biggest problems of AI data centers -- the buildup of extreme heat -- and Supermicro in November predicted that 15% to 30% of new data centers would opt for DLC in the coming 12 months. The server maker specializes in this area so could take significant market share.

Second, during the quarter that ended in December, top chip designer Nvidia rolled out its new architecture, Blackwell, a potentially game-changing platform that's spurred enormous demand. In fact, Nvidia says demand has surpassed supply. In November, Supermicro launched its highest-performing supercluster, a system featuring Blackwell that "significantly" increases the number of Nvidia graphics processing units (GPUs) in a rack. And that equals huge gains in GPU compute density. Supermicro recently deployed the world's largest DLC supercluster, including 100,000 Nvidia GPUs.

It will be important to see if Supermicro, in spite of the headwinds it has faced in recent months, still was able to benefit from the Blackwell launch and if this new architecture could generate revenue growth for the company in the quarters to come.

Another important date in February

As for actual financials, investors should look to Feb. 25, when Supermicro is expected to file its audited 10-K and 10-Q reports to get a clear picture of the situation. Even though Supermicro doesn't expect restatements, we'll be able to see what the audited reports show.

Let's get back to our main question: Will Supermicro stock soar after Feb. 11? It's possible. If the company shows that certain elements like Nvidia's Blackwell launch or Supermicro's own DLC technology are driving growth, aggressive investors may pick up shares to get in early on this AI player, and that could lift the stock.

But the most important date on Supermicro's calendar comes later this month, with the filing of its audited financials -- and I would wait for that moment before betting on any long-term trend for this AI stock.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.