Supermicro Stock Is Up By More Than 70% in 30 Days. Is It a Buy?

Super Micro Computer (NASDAQ: SMCI) might be one of the most volatile artificial intelligence (AI) stocks. For instance, the stock rallied 70% over the past month but has cooled off a bit in recent days. The ups and downs of the five-year stock chart explain why investors are cautious.

Supermicro (as it is also known) has traded up by more than 1,000% over the past five years, but it has also seen many 20% to 50% drops in that time and remains well removed from all-time highs. Is Supermicro's recent surge the start of a major comeback or a rally that's bound to lose momentum? Here's what investors should consider.

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High year-over-year sales growth masks declining sequential growth

Supermicro creates custom server motherboards, liquid-cooling racks, and other AI infrastructure that help AI chips run efficiently. Its recent revenue results look good year over year, but are a bit concerning on a sequential level.

Supermicro reported 123% year-over-year revenue growth in its fiscal 2026 third-quarter results (ended March 31, 2026). However, it also represented a 19% sequential dip. Other leaders in the AI build-out, like Dell Technologies and Micron Technology, have been posting high sequential growth in recent quarters, which makes Supermicro's declining sequential growth concerning.

Supermicro also hasn't been able to translate the AI boom into rising net profit margins. While Dell's net profit margins have soared as it's capitalized on the AI opportunity, Supermicro is still posting net profit margins at or below 5%.

Trust issues overwhelm the bullish narrative

The frustrating thing about Supermicro stock is that it is in the right industry, but has damaged its trustworthiness among investors. That's the major red flag that has shown up repeatedly in the company's history.

Short-seller firm Hindenburg Research accused Supermicro of accounting manipulation two years ago, and to this day, the stock is trading below its price per share when the short report was announced. A lot of drama unfolded, with Supermicro delaying its 10-K, which was supposed to come out less than one week after the report was published, and finding itself on the brink of getting delisted.

The Hindenburg Research report detailed Supermicro being temporarily delisted in 2018 for not filing financial statements and being charged by the Securities and Exchange Commission for "widespread accounting violations" in 2020. Leadership didn't change much between 2018 and 2024, and it hasn't changed much now, either.

Supermicro said it did not engage in any wrongdoing after conducting an internal investigation. This short report and the fallout fractured trust, which continues to play out to this day.

For instance, Supermicro was the centerpiece of a $2.5 billion chip-smuggling scandal earlier this year, as it attempted to circumvent export controls. One of Supermicro's co-founders was involved and resigned shortly after the news came out.

The $2.5 billion chip smuggling scandal comes as the still-active accounting investigation intensifies. Supermicro wasn't cleared of that older issue. Investors just haven't heard anything new about it like they did when Hindenburg first released its report.

In the meantime, don't trust the company's guidance. In its fiscal 2026 Q2 report, management guided for at least $12.3 billion in Q3 FY26 revenue. Supermicro only delivered $10.2 billion when results came out. It's hard to take Supermicro's optimistic Q4 FY26 guidance seriously in this context. Until the investigation's full results are revealed, Supermicro stock should be avoided.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.