Super Micro Computer (SMCI) Stock Plummets 10% After Oracle Cancels Massive AI Server Deal

Key Takeaways

• Super Micro Computer (SMCI) shares plummeted approximately 10% during Thursday’s trading session, continuing a turbulent period for the server manufacturer.
• According to BlueFin Research, Oracle has terminated an agreement to acquire 300–400 AI server racks from Super Micro, representing a loss valued between $1.1–$1.4 billion.
• Company co-founder Yih-Shyan “Wally” Liaw is confronting federal criminal charges related to the alleged smuggling of export-restricted Nvidia processors to Chinese entities.
• Several class action lawsuits claim the company participated in a $2.5 billion operation that illegally shipped restricted GPU servers to China-based organizations.
• Notwithstanding the sharp decline, second-quarter fiscal 2026 revenue reached $12.68 billion, surpassing projections by 23%, while annual guidance was increased to $40 billion.

Thursday proved to be a difficult day for Super Micro Computer. Shares tumbled approximately 10% during morning hours, retreating from Wednesday’s closing price of $29.18 to a session low of $26.07. This downturn arrived after a month-long rally that saw the stock appreciate 35%, creating vulnerability to negative developments.

Super Micro Computer, Inc., SMCI

The negative developments materialized quickly.

According to a report from independent research firm BlueFin Research, Oracle has abandoned its plans to procure between 300 and 400 AI-powered server racks from Super Micro. With each Nvidia chip-equipped rack carrying an approximate price of $3.5 million, the cancelled transaction represents an estimated loss of $1.1 billion to $1.4 billion for Super Micro.

Industry sources indicate Oracle is shifting this substantial business to competing manufacturers such as Wiwynn, Dell Technologies, and Hewlett Packard Enterprise. Oracle’s shares also experienced early trading declines as market participants assessed potential setbacks to its cloud infrastructure expansion strategy.

Mounting Legal Challenges

The cancelled contract doesn’t exist in isolation. This development follows federal criminal charges filed against co-founder Yih-Shyan “Wally” Liaw, who stands accused of participating in an operation to illegally export restricted Nvidia processors to China. Liaw has entered a not-guilty plea during proceedings at a New York federal courthouse earlier this month.

Multiple law firms have initiated class action litigation targeting the company. Both Levi & Korsinsky and Faruqi & Faruqi cite allegations of a $2.5 billion illegal operation in which export-restricted Nvidia GPU servers were unlawfully diverted to Chinese-based entities. The class action period spans from April 30, 2024 through March 19, 2026, with May 26 established as the deadline for lead plaintiff motions.

A previous Department of Justice indictment involving three company-affiliated individuals had already triggered a 33% stock decline.

In response to these developments, JPMorgan has reduced its SMCI price target from $40 to $28 while maintaining its neutral rating.

BlueFin Research also highlighted concerns regarding surplus inventory of previous-generation GPU models that are proving difficult to liquidate. This inventory challenge compounds existing legal uncertainties.

Financial Performance Shows Strength Despite Margin Pressure

The fundamental picture isn’t entirely negative. Super Micro’s second-quarter fiscal 2026 financial results, released on February 3, demonstrated impressive topline performance. Revenue totaled $12.68 billion, substantially exceeding the $10.34 billion analyst estimate and representing 123% year-over-year growth.

Non-GAAP earnings per share reached $0.69 versus the $0.49 consensus expectation—a 41% outperformance. Company leadership elevated full-year fiscal 2026 revenue projections to a minimum of $40 billion, an increase from the previous $36 billion guidance. CEO Charles Liang highlighted over $13 billion in Blackwell Ultra system orders.

However, GAAP gross margin contracted to just 6%, down from 12% in the prior-year period. This widening gap between revenue expansion and profitability metrics remains a focal point for market analysts.

Current analyst sentiment is divided: 5 Buy ratings, 9 Hold ratings, and 4 Sell ratings, with an average price target of $33.20.

The company’s next major event is the third-quarter fiscal 2026 earnings release, currently projected for May 5.

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