Super Micro Stock Investors Just Got Another Bad News

This article first appeared on GuruFocus.

Super Micro Computer (NASDAQ:SMCI) shareholders filed a lawsuit accusing the company of securities fraud, alleging it concealed its reliance on sales to China that violated U.S. export laws, according to a report on March 26.

The class action complaint in San Francisco federal court claims the server maker overstated its business prospects. It also alleges the company failed to disclose weaknesses in its controls for complying with export regulations.

The legal action follows criminal charges against a company co-founder and two other individuals for allegedly smuggling servers using Nvidia’s chips into China. Super Micro’s shares slid 33% on March 20 after the indictment became public. The company has said it is cooperating with the government’s investigation and was not named as a defendant.

Analysts lowered price targets on the stock following the charges. Rosenblatt Securities reduced its target to $32 from $50, while Bank of America cut its target to $24 from $34. The lawsuit seeks unspecified damages for investors who bought Super Micro shares between April 30, 2024, and March 19, 2026.