Key Points:

• Super Micro Computer, related to NVIDIA, faces SEC and DOJ probes over accounting concerns.
• Booming sales continue, but Hindenburg escalate warnings about financial practices.
• Stock may charm day traders due to high AI sector interest and legal risks.
• Ready to retire? Schedule a free consultation today!

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Edited Video Transcript:

Okay. Super Microcomputer.

You know, it’s a chip company and apparently quite a good one and server company.

I mean, people have fallen in love with it because it’s one of these high-end chip companies that lives in the halo of NVIDIA (NASDAQ: NVDA).

So two things have happened to them.

The first one is, is that they may have sort of fudged some of their numbers, according to, you know, an SEC look.

I mean, I’d be worried because no matter how good your company is, no matter how great your products are, once the SEC starts sniffing around, it almost never works out well.

But they did have good numbers, right?

Yeah, they had some solid numbers, which kind of took the edge off of the slide after the report.

The Justice Department was looking at them, I think, you know, that probably helped stem some of the short selling.

But again, it’s had a huge run, big stock split.

And again, I think their servers, which use NVIDIA chips, the sales, as we saw, were good.

But again, when Hindenburg, I mean, I’ve been in this business a long time.

You know, there’s always been the kind of short sellers that came and went because they’d either make a bad call or somebody like Ackman would spin them on their head.

But Hindenburg’s good.

And people that have seen some of their work in the past, when they go in there, they’re usually pretty spot on, because they’re always committing their own trade as well.

And they were just like, yeah, some of the accounting looks really, really shifty.

And it’s going to be interesting to see how this plays out.

Because like you said, Doug, when the Justice Department gets a hold of you and they think there’s something worthwhile, they don’t have anything better to do.

So they’ll stick with it until they can be proven wrong three or four times.

Yeah.

I mean, if you’re a trader, this is a good opportunity to ask the question of balancing what could be very good results in a hot sector against a government investigation.

Now, you’d have to be an intrepid trader, but that doesn’t mean you can’t do it.

You’re walking a very thin line.

You’re betting that the government, you know, sort of says, well, you know, it’s not that bad.

We’re going to fine you a dollar and business continues to do well.

Or the government comes in and says, you know, there’s fraud here and suddenly the stock takes a nosedive.

So this is the kind of stock if I’m looking at it, I’m looking at it really as almost a day trader.

Yeah, and again, the AI momentum is just absolutely, you know, almost unstoppable.

But at one point, as we’ve discussed in the past, it’s going to hit a wall.

Because there’s just going to be a point where the kind of incredible sales that NVIDIA, Super Micro, and other companies have had, they’re going to hit a wall and they’re going to hit comps that they just can’t stand up to.

And when that starts to happen, hey, it could be a year from now, two years from now.

NVIDIA is saying, oh, the Blackwell is going great and the orders are staggering and this and that.

And it’s like, well, okay.

But at one point, everything’s going to slow down and it’ll be interesting to see how Super Micro Computer falls into that play.

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