SMCI Stock Plunges after Employees Charged in Chip Smuggling Case, But Raymond James Stays Bullish

Super Micro Computer SMCI -28.48% ▼ shares tumbled 28% on Friday after U.S. prosecutors charged three employees with smuggling Nvidia NVDA -1.57% ▼ GPU-based servers to China. Despite the sell‑off, Raymond James analyst Simon Leopold reiterated a Buy rating and $35 price target, arguing that the long‑term fundamentals remain intact even as the company faces a new reputational overhang.

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Employees Charged in $2.5B Export‑Control Scheme

According to the U.S. Attorney’s Office for the Southern District of New York, three individuals, including a current SMCI senior vice president and board member, were charged with violating U.S. export-control laws by sending servers with advanced Nvidia GPUs to China through a Southeast Asian intermediary.

Prosecutors say the group falsified end‑user information, hid shipping routes, and worked around both internal compliance checks and government verification. The alleged scheme involved billions of dollars in restricted technology shipments since 2024.

Case Raises Fresh Compliance Risks

The analyst noted that this new case adds another layer of legal and compliance risk for Super Micro on top of problems investors were already worried about, such as accounting delays, weak internal controls, and related-party concerns. As a result, Leopold reduced the valuation multiple he uses for the stock.

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The situation also adds to what they call a “reputational discount,” meaning investors may trust the company less, not just on financial reporting, but now also on export-control compliance and board oversight, especially since a board member was allegedly involved.

He warned that Super Micro could face more regulatory scrutiny from agencies like the Commerce Department (BIS) or the Department of Justice. Even though the company itself hasn’t been charged, the scale of the alleged scheme could make investors and customers view the company as riskier, potentially affecting relationships with Nvidia, hyperscalers, and U.S.-aligned buyers.

Analyst Notes No Charges for SMCI

However, the analyst recommends closely watching how the case develops. He noted that Super Micro itself has not been charged and that the indictment describes the actions as deliberate evasion by individuals, not a failure of the company’s controls. Still, he acknowledges that the company may need to strengthen its compliance programs and third‑party oversight to restore confidence.

Is SMCI a Good Buy Right Now?

Wall Street has a Hold consensus rating on Super Micro stock based on three Buy, six Hold, and three Sell recommendations. The average SMCI stock price target of $38.89 indicates 75.06% upside potential.

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