MW Super Micro's stock is up 20%. Here's what's really behind the big rally.

By Emily Bary and Therese Poletti

An end to Super Micro's delisting drama is welcome news for 'fast money' and quantitative investors. But one analyst says institutional investors are still avoiding the stock.

Super Micro Computer Inc.'s stock is up 22% in morning trading after the server maker ended its delisting drama by filing audited financial statements for two recent periods.

The company had needed to delay those filings as a variety of issues began swirling last summer. Short seller Hindenburg Research raised doubts about the company's financials and auditor Ernst & Young resigned. The company had a Feb. 25 deadline to submit those overdue financials to the Securities and Exchange Commission or it risked Nasdaq delisting.

Read also: Super Micro submits its overdue filings. What's next for the server maker.

A delisting would have hammered Super Micro's stock $(SMCI)$, "so you get a relief," Mizuho desk-based analyst Jordan Klein told MarketWatch.

But what's really behind the strength of the rally? "I think it is all fast money and day traders, as well as quant and passives chasing" the move, Klein continued. There aren't "really any real institutional buyers rushing to own" Super Micro shares given some fundamental business issues still lingering. The company faces risk due to competition, which could hurt its market share and pricing. And investors have been dialed in on the company's pressured margins lately.

Super Micro shares are still down more than 50% from their peak close hit last March.

There are a few potential catalysts on the horizon for Super Micro, however. One is Nvidia Corp.'s $(NVDA)$ report after Wednesday's closing bell. If the results are as good as Klein thinks they could be, that could help Super Micro's stock, he said.

But more telling could be what Dell Technologies Inc. $(DELL)$ has to say when it reports results Thursday afternoon. While Super Micro partners with Nvidia and sees itself poised to benefit from the proliferation of Nvidia's new Blackwell lineup, Dell is a direct competitor in the server market. Last week, Melius Research analyst Ben Reitzes said he confirmed reports that Dell has received a $5 billion contract from Elon Musk's xAI startup and that the plan is to deploy the systems quickly.

Read also: Dell expected to provide lower guidance next week, but AI servers remain a bright spot.

In that sense, Dell's earnings "will matter most in my view for where the stock goes next," Klein wrote. Investors will be focused mainly on what Dell's management has to say about margins on Blackwell-related offerings and on the outlook in general.

Analysts also believe that Super Micro and Hewlett Packard Enterprise Co. $(HPE)$ are also possible winners in the rumored xAI deal - but at a smaller scale. No details have been forthcoming yet. The companies declined to comment when asked about a potential contract with xAI.

-Emily Bary -Therese Poletti

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February 26, 2025 11:00 ET (16:00 GMT)

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