Super Micro Computer (SMCI) shareholders have sued the AI server maker, alleging that the company committed securities fraud by hiding its reliance on sales to China, which resulted in a violation of U.S. export laws, Reuters reported.
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New trading tool for NVDA bearsThe lawsuit follows criminal charges against Yih-Shyan Liaw, a co-founder and director; Ruei-Tsang Chang, a sales manager in Taiwan; and Ting-Wei Sun, a contractor, for smuggling servers powered by Nvidia (NVDA) chips into China. SMCI stock plunged 33% on March 20 in reaction to the news. The company issued a statement saying that it has not been named a defendant by the Department of Justice and that it has been fully cooperating with the government’s investigation.
SMCI Faces Class Action Lawsuit
The class action lawsuit filed by shareholders in San Francisco federal court accuses Super Micro Computer of overstating its business prospects and inflating its stock price by deliberately concealing that a significant portion of its server sales was to companies in China.
The lawsuit also accuses SMCI of failing to disclose that its sales of servers to companies in China violated export laws. It also notes material weaknesses in the company’s controls to ensure compliance with export control laws and regulations.
The lawsuit seeks unspecified damages for SMCI investors who purchased the stock between April 30, 2024, and March 19, 2026.
Analysts’ Reactions
Several analysts have lowered their price targets for SMCI stock following the news of the indictment of three individuals associated with the company.
On Wednesday, Rosenblatt Securities analyst Kevin Cassidy lowered the price target for Super Micro Computer stock to $32 from $50, while reiterating a Buy rating. The 5-star analyst thinks that the controversy around Liaw and the U.S. Attorney’s indictment alleging export-control violations puts “a dark cloud over what would have been an exciting product announcement.”
While Cassidy remains confident about SMCI and its “sound” order backlog, he expects shares to be under pressure until the investigation is completed.
Meanwhile, Bank of America analyst Ruplu Bhattacharya cut his price target for SMCI stock to $24 from $34 and reaffirmed a Sell rating. The 4-star analyst contends that, while the company is not named as a defendant in the indictment of co-founder Liaw, it is another negative for Super Micro’s brand. Bhattacharya expressed concerns that the indictment could result in some suppliers restricting SMCI’s access to components, customers pausing orders or awarding contracts to rivals, and further regulatory scrutiny.
Is SMCI a Good Stock to Buy Now?
Currently, Wall Street has a Hold consensus rating on Super Micro Computer stock based on eight Holds, three Buys, and three Sell recommendations. The average SMCI price target of $31.70 indicates 32% upside potential. SMCI stock has declined about 18% year-to-date.
