Despite concerns from some investors, Super Micro says its business is still flourishing.
Super Micro Computer (SMCI 15.21%) stock has been under pressure for the last several months. But an update from the company had shares soaring today. Investors have been concerned about dropping profit margins, questions about accounting practices, and the delay in Supermicro filing its 10-K annual report. However, the company says sales are still robust.
Those issues have sent the stock down by 44% over the past three months. That said, today’s update helped move shares higher by as much as nearly 18%. As of 12:30 p.m. ET, Supermicro stock was still up by 13.8%.
Stock-split momentum
Supermicro supplies server and storage system components to data centers building artificial intelligence (AI) capacity. Data center growth is exploding as technology companies are seeking maximum computing power to train AI models. Supermicro sales have grown at the same time. The stock followed earlier this year, and the company implemented a 10-for-1 stock split, which took effect on Oct. 1.
But with the accounting questions and other concerns, the stock didn’t gain any momentum since the stock split until now. Today, Supermicro announced sales of its server systems, including liquid cooling solutions, have been robust. It said it’s shipped more than 2,000 liquid-cooled server racks since June. It added that it is on a quarterly pace to deploy “more than 100,000 GPUs [graphics processing units] with liquid cooling solution [direct liquid cooling] for some of the largest AI factories ever built.”
Music to investors’ ears
That was news that investors wanted to hear, as the company works to release its delayed annual report. Until then, questions on its prior accounting practices and business results remain. But the company seems to have reassured some investors that the business is still selling its server systems at a rapid pace.
Howard Smith has positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
