Super Micro Computer Inc (NASDAQ:SMCI) Soars

Shares of Super Micro Computer Inc witnessed a remarkable increase of over 23% in premarket trading on Tuesday after the AI server manufacturer introduced an independent audit firm unexpectedly and submitted a compliance plan to NASDAQ.

Potential Delisting averted

This strategic move could potentially prevent the company’s delisting, although NASDAQ still needs to formally approve the plan and grant an extension for the submission of its 10-K filing. An analyst from Lynx Equity Strategies views this approval as likely to be "just a formality."

Analyst Insights

In a prior note, analyst KC Rajkumar highlighted that SMCI is a crucial player in the AI data center space, and delisting was a low probability event leading to a loss of capital access. With the stock trading at a significant discount, Rajkumar set a price target (PT) of $45.

Following the filing of an 8-K form last night, which diminished the risk of delisting, Rajkumar anticipates a "vicious short-squeeze" could unfold in SMCI shares. The stock surged by 30% in after-hours trading, and the analyst expects it to approach the PT soon.

Market Impact

Rajkumar warned that competitors like Dell (NYSE:DELL), who had attracted investor interest expecting to capture SMCI's market share, might see a decline in their stock prices.

Lynx reiterated the assertion that SMCI holds a leadership position in the rapidly expanding liquid-cooled GPU server data center market, a position likely to remain unchallenged.

During SMCI’s recent delisting uncertainty, some investors speculated that Nvidia (NASDAQ:NVDA) might redirect GPU server orders away from SMCI to other suppliers, including Dell. However, Lynx analysts contended that scalable liquid cooling technology is not standardized and that vendors like SMCI are not easily replaceable.