Why Super Micro Computer Rallied Over 60% in the First Half of the Year

Shares of AI-focused server-maker Super Micro Computer (SMCI -2.21%) rallied 60.8% in the first half of the year, according to data from S&P Global Market Intelligence. Super Micro entered 2025 after a somewhat disastrous second half of 2024, when it was attacked by a short-seller, followed by its auditor resigning in October. However, in February, Super Micro's new auditor, BDO, signed off on the company's financials from the prior three years. The seeming validation of the company, as well as optimism over AI growth in May and June, lifted shares strongly off a cheap valuation to start the year. BDO signs off, and Super Micro blasts off In its audit, BDO delivered an adverse opinion on Super Micro's internal controls and procedures; however, when actually reviewing transactions from 2022, 2023, and fiscal 2024, BDO noted that Super Micro's financial statements, "present fairly, in all material respects, the financial position of the Company." So, Super Micro, while apparently being somewhat sloppy in its back-office procedures for a U.S. public company, was apparently cleared of the worst accusations of fraud. As a result, the company's stock rallied to over $66 per share in early February. However, that rally was short-lived, as the stock soon gave way to the Trump Administration's tariff war. While Super Micro prides itself on being a U.S.-based server maker, its component supply chain and those of its chipmaking partners is very international. Thus, Super Micro soon fell back to earth along with many fellow AI companies. Super Micro actually also had two somewhat disappointing earnings reports, as revenue growth missed expectations in both the December and March quarters. Still, the company posted 54.9% growth in the December quarter and 19.5% growth in March, which isn't so shabby. Image source: Getty Images. Management chalked up the misses to a delay in the release of Nvidia's (NVDA 0.53%) Blackwell chips, which only began production in late 2024 and ramped up throughout the first quarter. So, it's possible that availability may have been limited in the March quarter as, "customers delayed making platform decisions," according to the company. But management also forecast a 30% sequential step-up in revenue for the current June quarter, which should mark the beginning of the Blackwell cycle for Super Micro. About a week after May's earnings, Super Micro got another positive jolt after it inked a multi-year, $20 billion deal with Datavolt, a Saudi Arabian data center operator, as part of the Trump administration's strategic partnership with Saudi Arabia. Unsurprisingly, Super Micro and other AI companies rallied in the wake of that announcement. Where Super Micro goes from here Despite the first-half rally, Super Micro still remains far off its 2024 highs, and only trades at 16 times next year's earnings estimates. That's not expensive for a high-powered AI stock, but Super Micro's uneven growth, questions over margins, and perhaps investor hesitance due to last year's short-seller attack have limited its valuation. It will be interesting to see how results come through as Blackwell ramps, and whether investor sentiment can continue recovering.