Super Micro (SMCI) Stock Drops 33% as Analyst Cuts Price Target After Co-Founder Smuggling Charges

TLDR

• SMCI stock fell 33% on March 20, closing at $20.53, after criminal charges were filed against three company employees including co-founder Wally Liaw
• Liaw was charged with smuggling ~$2.5B in Nvidia-powered AI servers to China, violating U.S. export controls
• Liaw resigned from the board immediately; DeAnna Luna was named acting Chief Compliance Officer
• Northland Securities analyst Nehal Chokshi downgraded SMCI to Hold and slashed his price target 65%, from $63 to $22
• SMCI’s 14-day RSI hit ~24, signaling oversold conditions, with short interest at 14.7%

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Super Micro Computer (SMCI) had a brutal week. The stock cratered 33% on March 20 after federal prosecutors unsealed criminal charges against three people tied to the company.

Super Micro Computer, Inc., SMCI

Among those charged was co-founder Yih-Shyan “Wally” Liaw, who was arrested by the U.S. Justice Department. He resigned from the board effective immediately following his arrest.

The charges allege that the group smuggled approximately $2.5 billion worth of Nvidia-powered AI servers to China, bypassing U.S. export restrictions. Prosecutors say the servers were routed through a Southeast Asian firm for repackaging before being shipped to China.

Super Micro itself was not named as a defendant. The company fired one contractor and suspended two staff members in response.

Leadership Changes

SMCI closed at $20.53 on March 20, down from highs above $100 in 2024. The stock was trading around that level in pre-market Monday, briefly dipping 0.88% before edging slightly positive.

Following Liaw’s departure, the board now has eight directors. DeAnna Luna was appointed acting Chief Compliance Officer. Luna joined SMCI in 2024 and brings over 20 years of trade compliance experience, including prior roles at Intel and Teledyne Technologies.

The company also announced it has separated the Chief Compliance Officer and Chief Financial Officer roles. SMCI did not give a reason for Liaw’s resignation or say whether it plans to fill his board seat.

Analyst Downgrades

Northland Securities analyst Nehal Chokshi downgraded SMCI from Buy to Hold on Monday. He cut his price target by 65%, from $63 to $22.

Chokshi called the CCO/CFO role split a positive move but described it as “reactionary rather than proactive.” He warned the stock will face flat revenue and earnings growth until the company separates its Chairman and CEO roles, both currently held by Charles Liang.

Argus also downgraded SMCI to Hold following the charges. The consensus on TipRanks sits at Hold, with two Buy ratings, eight Holds, and three Sells. The average price target is $34.33.

This latest episode adds to a difficult stretch for the company. Auditor Ernst & Young resigned abruptly in late 2024 over alleged independence concerns between the board and management. SMCI has also faced delayed regulatory filings and Nasdaq compliance warnings over that period.

Technically, the chart looks rough. The 14-day RSI is around 24, which signals oversold conditions but also persistent selling pressure. The stock is trading below all major moving averages, including the 50-day, confirming a downtrend. Short interest stands at approximately 14.7%.

The average analyst price target of $34.33 implies 67.2% upside from current levels, though the path there remains unclear given the ongoing legal proceedings.

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