Super Micro Computer (SMCI 12.23%) has been through a difficult few months that started with questions about its financial reporting and peaked with a potential Nasdaq delisting. This resulted in the stock plummeting more than 67% from September through mid-November.

All of this halted spectacular momentum that had pushed the stock to a nearly 800% gain in the previous three years. Supermicro was one of the early winners of the artificial intelligence (AI) boom as it makes servers and other equipment critical to the operations of AI data centers.

AI customers flocked to the company for these products, which resulted in quarterly revenue last year surpassing the company's full-year revenue as recently as 2021. The company's stock was one of the hottest AI stocks before the headwinds picked up.

In recent times, though, Supermicro has successfully addressed questions and regained the faith of some investors. Just this week, the company avoided its biggest risk -- a Nasdaq delisting -- by filing audited financial reports according to the Feb. 25 deadline set by the Nasdaq. These were reports that missed the usual filing schedule and put the company at risk for delisting.

Does this move by Supermicro finally make this beaten-down stock a buy?

Image source: Getty Images.

Supermicro's path to soaring revenue

First, here's a quick summary of the Supermicro story. The 30-year-old company surged to the forefront in recent years, due to demand from AI customers. These customers appreciated the company's ability to quickly tailor equipment with the latest chip innovations from partners like Nvidia to their needs. This resulted in soaring revenue and net income.

But troubles arose in late August when Hindenburg Research published a short report alleging "glaring accounting red flags." The situation got worse when Supermicro said it would be late filing its 10-K annual report and its 10-Q quarterly report and the company's auditor resigned. A non-compliance letter from the Nasdaq further shook investor confidence as it indicated the unfiled financials could lead to a delisting.

Since then, Supermicro has hired a new auditor, BDO, and agreed to file the tardy financial reports as of Feb. 25. Meanwhile, the company also cooperated with a review of its operations by an independent special committee, and this review found no evidence of wrongdoing or fraud. The committee mainly recommended Supermicro strengthen its executive team so that it could better support a growing company.

This week, Supermicro filed the financial reports, without any restatements, according to the Nasdaq deadline.

Regaining Nasdaq compliance

"The company has received correspondence from the Nasdaq staff that the company has regained compliance with the filing requirements, and the matter is now closed," Supermicro said.

This is very positive news because a delisting could have resulted in the flight of many investors. For example, institutional investors generally hold stocks trading on major exchanges -- not stocks trading over the counter (OTC). And lower volume in OTC stocks means the stock would be more difficult to trade, as well. By remaining listed on the Nasdaq, the company scored a major victory.

Investors also will appreciate that Supermicro didn't have to make changes to its financial reports from the earlier unaudited versions. This also is an important point.

Does all of this make Supermicro a buy? It's true the company is in a much better position today than it was just a few months ago. Investors have more visibility regarding the financial picture, and the company's business continues to look promising, considering its growth so far and the fact that the AI infrastructure buildout is far from over. Analysts expect today's $200 billion AI market to reach beyond $1 trillion by 2030 -- so there's a lot more for strong AI companies to gain in the years to come.

An "adverse opinion"

Supermicro still faces some challenges, though. In the recent 10-K filing, BDO said it had an "adverse opinion" of Supermicro's internal financial controls. In the report, Supermicro says it's reviewing its weaknesses and putting into place actions to improve. This includes further training sessions for accounting staff, upgrading IT systems, and hiring.

All of this means that the answer to the question of whether the stock is a buy or not depends on your comfort with risk. Cautious investors should wait until the company advances further along on this path to recovery. For example, if you're in this category, you might wait until Supermicro assembles an executive team according to the independent committee's recommendations. You also may want to see another audited financial report or two and consider how the company is progressing.

However, aggressive growth investors looking for a promising AI company might consider scooping up a few shares of Supermicro. If it strengthens its internal controls, as promised, it could soar from today's levels and may once again become one of the most sought-after AI stocks.