Shares of Super Micro Computer (SMCI) traded more than 30% lower on Wednesday after the company disclosed that its accounting firm had resigned.
Ernst & Young resigned while in the process of conducting an audit for the server company’s recent fiscal year.
The accounting firm’s resignation letter stated "we are resigning due to information that has recently come to our attention which has led us to no longer be able to rely on management's and the Audit Committee's representations”.
Ernst & Young’s audit results had apparently found that Super Micro “demonstrates a commitment to integrity and ethical values,".
Today’s news is another in a string of allegations towards Super Micro Computer over the last three months.
In August, short selling firm Hindenburg Research alleged "accounting manipulation" at the AI server manufacturer. Shares dropped more than 30% following that report to find support at $40.
Following that, The Wall Street Journal reported in September that the Department of Justice had opened an investigation into Super Micro Computer. Shares dropped nearly 20% following that report to once again find support at $40.
Today’s news finally broke that psychological support of $40 as shares are now trading at $33.17 near their lows of the day.
Super Micro Computer’s only response to the news has been to announce it will provide a first quarter fiscal 2025 business update on Tuesday, November 5. The company is currently in its quiet period ahead of its quarterly earnings report set for October 4.
Investors can expect a round of sell recommendations around the corner for SMCI shares as Wall Street digests the news.
From a technical perspective, Super Micro Computer shares are trading in a long-term bear market trend with a price target of $25.
What is bad news for Super Micro Computer is good news for Dell (DELL).
On Wednesday, shares of Dell jumped more than 6% as it appears one of Dell’s biggest competitors in the AI server space is falling out of favor with investors.
Over the last month, Dell and Super Micro have been sparring in the headlines with new product releases.
Just two weeks ago, Dell announced new innovations to its Dell AI Factory. The updates from the company address the ongoing needs to power high-density computing and AI workloads.
The product updates followed a round of similar announcements from Super Micro Computer.
Investors see today’s news as a potential shift in the balance of AI server power that will favor Dell Technologies moving forward.
Dell, known best for its personal computers and business servers, has forged a path into the AI server space.
Revenue growth on a year-over-year basis has started to show signs of recovery after more than two years of decline.
That revenue growth led to a $0.19 surprise in earnings per share performance last quarter. The company is set to announce its current quarter’s results in roughly a month on November 24.
Dell stock is in the process of forming a potential technical breakout ahead of the earnings report.
Shares are moving through the $130 price level. This follows a bullish shift in the stock’s 50-day moving average just two weeks ago.
Investors may expect to see a “buy the rumor rally” in the weeks leading up to Dell’s earnings call.
Shares of Dell maintain a long-term bullish outlook with a price target of $150.
Eli Lilly and Company's (LLY) shares are down today following the company's earnings report this morning.
The company's revenue and earnings per share results fell short of Wall Street expectations. This is the first time since August 2022 that the company has missed both marks.
In addition to the earnings miss, Eli Lilly’s management lowered the company’s revenue guidance.
Today’s decline tested Eli-Lilly’s long-term 200-day moving average for the first time since March of 2023.
At that time, the stock was adjusting to lowered demand for its Covid-19 vaccine, resulting in a more controlled decline to that long-term support.
Today’s more aggressive test of the 200-day trendline suggests that the stock is likely to suffer additional selling. Shares also benefitted from the round-numbered support offered by the $800 price.
Investors should expects the $800 price to see a retest in the near future which will determine whether the stock’s decline is set to extend itself lower.
Despite recent volatility, Eli Lilly shares remain in a long-term bull market with a price target of $1000.