Interface News Reporter | Li Biao
Since the rise of US technology stocks driven by generative AI, US server manufacturer AMD has relied on its deep binding cooperation with Nvidia. From 2022 to March 2024, it has risen from a low of over $30 to a high of over $1200, with a cumulative increase of nearly 40 times. It has been selected as the "best performing US stock in the first half of the year" by Barron's Weekly.
But now this star stock has recently become a "monster stock" due to the financial fraud scandal, with its stock price fluctuating greatly.
Before the stock market on October 30th Eastern Time, Super Micro Computer submitted a statement to the US Securities and Exchange Commission, stating that Ernst&Young, who was responsible for the company's audit work, had resigned. It is worth noting that in previous years, the financial reports of Supermicro Computer were audited by Deloitte. Ernst&Young was a new agency hired by Supermicro Computer in March last year to audit the company's 2024 fiscal year report.
However, due to the financial fraud scandal, Supermicro Computer has decided to postpone the release of its annual report for the 2024 fiscal year, and there has been no progress so far.
In the SEC filing submitted by Supermicro Computer, Ernst&Young explained the reason for his resignation, stating that "he has recently obtained some information that makes it impossible to trust the statements of the company's management and audit committee, and he is unwilling to have any connection with the financial statements prepared by the management
This mutation caused the stock price of Supermicro Computer to plummet by 33% at the opening, and once again sparked speculation in the market about the financial fraud allegations made by short selling institutions two months ago.
In August, Hindenburg Research, a well-known short selling institution in the United States, released an investigation report on supercomputers. The report points out that there are "obvious accounting issues, undisclosed related party transactions, sanctions and export control failures, as well as customer problems" with Supermicro computers.
The report also pointed out that Supermicro computers have a long history of financial fraud. In 2018, the company was temporarily delisted from NASDAQ due to failure to submit necessary financial statements. The SEC later publicly accused the company of "widespread accounting violations that resulted in inflated sales, revenue, and profit margins.
On the day of the short selling report, it caused a huge market shock, and the stock price of Supermicro Computer plummeted by 30%.
Less than a month later, the US Department of Justice quickly intervened in the investigation. According to The Wall Street Journal, the US Department of Justice is mainly investigating short selling reports and former employee disclosures, with a focus on whether Supermicro Computer is suspected of financial fraud and other violations.
The latest stock price of Supermicro Computer, which is at the center of the storm, has fallen to around $32, returning to the level of early 2022.
Supermicro Computer started by producing servers and was founded in California, USA in 1993. It was listed on NASDAQ in 2007. The founder and current CEO of the company, Liang Jianhou, is a Taiwanese American entrepreneur. Currently, AMD is the world's third-largest server manufacturer, with operations in the United States, the Netherlands, Taiwan, China, and Japan. More than half of the company's revenue comes from the United States, while the rest comes from markets such as Europe and Asia.
Since generative AI sparked global tech companies to rush to buy AI servers, AMD has become the main beneficiary. The company has a close cooperation relationship with NVIDIA for many years. NVIDIA is mainly responsible for the design and development of GPU chips, while AMD is mainly responsible for producing AI servers with built-in NVIDIA GPUs. Currently, over 50% of the company's revenue comes from AI related servers, with a significant portion related to Nvidia's products.
According to the quarterly data released by Supermicro Computer for the fiscal year 2024, the company's total revenue for the entire fiscal year reached $14.9 billion, a year-on-year increase of 109%, and net profit was $1.2 billion, an increase of 88%. While revenue increased, the company's gross profit margin continued to decline. In the fourth quarter (as of June 30 this year), the gross profit margin further fell to 11.2%, far below the previous quarter's 15.5% and market expectations of 14.1%. The company explained that the main reason for the price decline is the intensification of market competition. Market analysis suggests that AMD is seizing market share by lowering prices this year to compete with server manufacturers such as Dell and HP.