To The Moon

Internal Case Closed.

$SUPER MICRO COMPUTER INC(SMCI)$ is moving past a major governance overhang after completing an independent investigation into an alleged $NVIDIA(NVDA)$ chip diversion scheme.

On Thu, 20 Aug 2026, SMCI announced that the probe, led by independent directors Scott Angel & Tally Liu and conducted with Munger, Tolles & Olson and forensic consultant AlixPartners, found no evidence that current senior management knew about the alleged diversion scheme or any actual diversion of restricted products. (see below)

The company also said it found no evidence that SMCI directly sold export-controlled products to known restricted parties or that its previously issued financial statements could not be relied upon.

The investigation followed the 19 Mar 2026 indictment of two SMCI employees and a contractor in connection with an alleged scheme of Nvidia-powered artificial intelligence (AI) servers that prosecutors say were diverted to China through intermediaries.

SMCI the company was not named as a defendant and confirmed the 3 individuals no longer have any relationship with the company.

Million Dollar Question.

With investigation now concluded and SMCI implementing additional export-compliance measures, a significant governance concern appears to be easing.

Just to be clear, the internal corporate investigation does not legally bind or stop ongoing federal criminal prosecutions and government investigations.

Back in March 2026, US Dept of Justice (DOJ) indicted SMCI co-founder Yih-Shyan Liaw, alongside two others, for allegedly smuggling $2.5 billion worth of Nvidia-powered AI servers to China.

Liaw has pleaded not guilty.

His criminal trial has been pushed back to March 2027, meaning the core criminal case at the heart of the controversy is still over half a year away from a courtroom resolution.

While internal investigations may have ended ‘conclusively’, SMCI the company "continues to cooperate with government authorities in their ongoing investigations".

The DOJ and SEC have not officially closed their files or issued a formal "declination" to prosecute the entity itself.

With the broader legal case remains unresolved, should investor buy, sell or hold the stock now?

To decide which action to execute, it is necessary to understand SMCI, the company.

SMCI Profile.

SMCI is a California-based tech company that (a) designs, (b) develops, and (c) manufactures application-optimized server, storage, and networking solutions for AI, cloud computing, enterprise, and other demanding workloads.

The company has built a broad portfolio spanning :

• GPU-optimized servers.

• Rack-scale systems.

• Storage platforms.

• Motherboards.

• Liquid-cooling technologies.

This positioned and benefitted the company, as a key infrastructure supplier benefiting from growing AI data center spending. It has a market cap of $22.4 billion.

Performance.

SMCI has rallied sharply over the past month, with the stock gaining +17.8%. (see below)

This has been driven primarily by a major improvement in its AI-server business outlook and a recovery in investor confidence.

The biggest catalyst came on 21 Jul 2026 when SMCI disclosed that it had secured more than $60 billion in new AI-server orders during fiscal Q4 2026.

At the same time, the company's Q4 2026 and full-year earnings report on 11 Aug 2026, have sent SMCI shares sharply higher, particularly owing to a solid gross margin surge.

Financial Highlights (Q4 FY2026)

• Net Sales: $11.12 billion (up from $5.76 billion a year prior); that’s a +93.06% YoY gain.

• Non-GAAP diluted EPS increased to $1.70 per share from $0.41 a year ago.

• Gross Margin: 17.6% (non-GAAP), up from Q4 2026’s 9.6%.

• Operating income jumped by +551.5% to $1.5 billion.

• Net Income (GAAP) increased by +503.7% to $1.178 billion.

• Operating cash flow came in at $747 million quarterly.

Future Outlook

• Q1 FY2027 Revenue: Expected between $14.5 - $15.5 billion.

• Q1 FY2027 EPS: Expected between $1.01 - $1.10.

• Full-Year FY2027 Guidance: Projected at $65 - $72 billion.

• During earnings call, management also said that a richer enterprise customer mix and wider adoption of its Data Center Building Block Solutions architecture should help improve profitability.

The stock remained firmly in positive territory for 2026, with YTD gains of +21.2%. However, it is down -19.2% over the past year.

Meanwhile, SMCI has decline during the past week largely because investors took profits after the stock's powerful post-earnings rally, all the while broader technology and semiconductor weakness added pressure.

On Fri, 21 Aug 2026, SMCI rose over +2% to $37.24 /share, snapping a 4-session losing streak.

Rebound came after shares:

• Fell -3.9% on 17 Aug.

• Fell -2.3% on 18 Aug.

• Fell -2.2% on 19 Aug.

• Fell marginally on 20 Aug.

Despite the latest bounce, SMCI remained -6.51% down over last week. (see below)

The stock is highly volatile. Its upcoming performance will depend on whether the company's enormous AI-server orders will translate into revenue, while sustaining the recent margin improvement.

In terms of valuation, SMCI stock is priced at 9.05x forward price-to-earnings and 0.56x sales, trading at a discount compared to the sector peers.

Risks & Concerns.

Despite the strong earnings growth, cash flow remained an important concern.

SMCI's rapid expansion required significant investment, resulting in substantial operating cash consumption earlier in the year.

The company nevertheless ended fiscal 2026 with $7.5 billion of cash and cash equivalents, while total bank debt & convertible notes stood at $8.7 billion.

Analysts’ Expectations.

$Goldman Sachs(GS)$

On 12 Aug 2026, GS maintained a "Sell" rating on SMCI but raised its price target to $34 from $30 following the company's Q4 2026 results and strong FY2027 outlook.

GS acknowledged SMCI's improving growth profile, including its (a) FY2027 revenue guidance, (b) broader customer diversification, and (c) expanded product portfolio.

However, GS remained cautious about whether the company can sustain the unusually strong profitability reported in the latest quarter.

$Citigroup(C)$

Citigroup maintained its "Neutral" rating on SMCI following the company's Q4 2026 results.

It also raised SMCI’s price target to $39 from $33.

Citi retained its "Neutral" view, implies that the stronger growth outlook was offset by ongoing questions around execution and the sustainability of SMCI's recently improved margins.

Wedbush.

Wedbush’s Dan Ives also maintained a "Neutral" rating on SMCI while raising its price target to $40 from $34.

Overall Assessment.

SMCI stock has a consensus "Hold" rating overall, signaling caution.

Out of 20 analysts covering the tech stock:

• 04 recommend a "Strong Buy”.

• 02 give a "Moderate Buy”.

• 11 stayed caution with a "Hold" rating.

• 01 offered a “Moderate Sell”.

• 02 gave a “Strong Sell” rating.

Average analyst price target for SMCI is $41.31.

Based on Mon, 24 Aug 2026 closing price of $35.17, its a potential upside of +17.46%.

On an even brighter note, Street-high target price of $60 suggests that the stock could rally as much as +70.60%.

Technical Analysis.

To see if SMCI is on track with analysts' forecasts, looking at its key technical tools of (a) Simple Moving Averages, (b) MACD, and (c) RSI, can offer useful clues.

Simple Moving Averages (SMAs).

On Mon, 24 Aug 2026, SMCI closed the day at $35.17 per share. This is above its 3 SMAs of (a) 20-day ($33.11), (b) 50-day ($30.55) and (c) 200-day ($31.39).

This tell a mixed but improving story of SMCI that turned constructive only after the sharp recovery off the March 2026 trough near $20.

The short-term trend is bullish, the 20-day SMA has risen above both the 50-day and 200-day, signalling that recent momentum has shifted upward and short-term buyers are in control.

The 50-day SMA is still trading below the 200-day SMA, for the "death cross" that formed around late December 2025 has not yet been unwound.

Until SMCI’s 50-day crosses back above the 200-day, the longer-term trend is technically still bearish.

MACD.

Both the MACD line (2.05) and Signal line (1.81) trade above the Zero line, signaling an overall bullish market bias in the immediate term.

With the MACD line (2.05) actively trading above the Signal line, this bullish crossover forms a positive Divergence of +0.24 that confirms accelerating upward momentum.

This indicates buyers are currently in control of the short-term swing trajectory.

RSI.

SMCI’s 14-day RSI of 55.09 sits in constructive, neutral-to-bullish territory (above the 50 midpoint, and comfortably below the overbought threshold of 70).

It indicates steady buying pressure without immediate exhaustion, suggesting room for further price expansion before reaching overbought conditions.

My viewpoints: (mine only)

After going through all the information when writing this post, I still think now is not the best time to buy SMCI.

Business itself looks strong :

• A record backlog of more than $60 billion in new orders.

• A full-year revenue forecast of $65 - $72 billion for fiscal 2027.

• A sharp improvement in profit margins to 17.6%.

However, SMCI stock price has not yet confirmed that a real turnaround has begun:

• The 50-day SMA is still below the 200-day moving average, which means the longer-term downtrend from December 2025 is not yet broken.

• In addition, the MACD histogram is shrinking, ‘revealing’ that recent upward momentum is weakening rather than getting stronger.

Geopolitical environment.

The wider market environment also makes this a difficult moment to buy.

The temporary ceasefire between US and Iran has ended on 17 Aug 2026, and shipping through the Strait of Hormuz has slowed sharply.

This has pushed oil prices up to around $90 - $94 per barrel, and long-term US interest rates have climbed to their highest level in about 19 years, with the 30-year Treasury yield near 5.3%.

With interest rates risen this much, investors tend to sell high-growth technology & semiconductor shares (eg. SMCI), which is exactly what have been witnessed in recent weeks.

On top of that, the US and Canada have started a trade war.

Effective from 22 Aug 2026, the US imposed a 50% tariffs on about $20 billion of Canadian goods.

Canada in retaliation, plans to match those tariffs from 8 Sep 2026 - raising the risk of higher prices and makes investors more cautious, which is bad news for a stock like SMCI.

For these reasons, it is better to wait than to buy at the current price of $35, which maybe falling knives prices.

A more sensible approach would be to wait for clear signs that the stock is recovering:

• Eg. its 50-day SMA rising above the 200-day SMA.

• Wait for share price to fall back toward the $31 - $25 range, which would offer a better entry point with less risk.

• Again, this is my opinion, not a personalized investment advice.

After all that has been said, still interested in SMCI ? Ha, ha, ha.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• NVDA Q2 earnings - Sustainable or Hype ?

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• US market 'maybe' crash & investor Plan B ?

• Do you think SMCI is still a “Buy”, with US federal prosecution still on schedule for March 2027?

• Do you think SMCI will be able to turnaround (now) given the headwinds facing AI-related stocks ?

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