As investors panic over a lost contract between Super Micro Computer (SMCI) and Oracle (ORCL), recent supply chain intelligence suggests a much bigger problem exists with its inventory, as slowing business with xAI and other customers weigh on near-term revenue.
Super Micro Computer shares plunged approximately 10% on Thursday, April 23, following reports that Oracle canceled a significant contract for Nvidia GB300 NVL72 racks. The contract loss, estimated between $1.1 billion and $1.4 billion, involved 300 to 400 racks valued at roughly $3.5 million each, with Super Micro having shipped only 100 to 200 racks before the cancellation.
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www.barchart.comThe Oracle contract cancellation is believed to be directly linked to the indictment of Super Micro’s co-founder for allegedly smuggling AI GPUs into China. Multiple class-action lawsuits have piled up alleging a $2.5 billion illegal server diversion scheme that routed restricted Nvidia GPU servers to China-based entities, with the U.S. Department of Justice having indicted three individuals tied to the company. The lead plaintiff deadline is May 26, and the class period runs from April 30, 2024 through March 19, 2026, ensuring that legal headlines will continue to weigh on sentiment in the near term.
Supply chain intelligence indicates that Wiwynn is expected to absorb the rack business Oracle pulled from Super Micro, representing a competitive loss that extends beyond the immediate revenue impact. Additionally, Super Micro’s business with xAI has reportedly slowed following the completion of GB300 rack shipments for the Colossus 2 data center earlier this year, with the next-generation Rubin platform still several months from introduction. This creates an uncomfortable gap in the company’s near-term revenue pipeline.
Compounding the problems, supply chain sources describe considerable excess B200 GPU inventory at Super Micro. The company had built up B200 inventory intended for xAI HGX AI Server shipments, but xAI demand shifted to GB200 NVL72 racks when shipments accelerated in mid-2025, with those racks being awarded to Dell (DELL) and HP Enterprise (HPE) instead. Although Super Micro was later awarded GB300 NVL72 racks by xAI in the second half of 2025, it has been unable to move the older B200 inventory, tying up capital and creating potential write-down risk.
Despite these headwinds, the bullish case for Super Micro has not entirely evaporated. The company’s fiscal Q2 2026 earnings report showed revenue of $12.68 billion, beating estimates by 23%, with non-GAAP EPS of $0.69 surpassing the $0.49 consensus by 41%. Management raised full-year fiscal 2026 revenue guidance to at least $40 billion, up from $36 billion, with Q3 revenue guided to at least $12.3 billion. However, GAAP gross margin compressed sharply to 6% from 12% year-over-year, underscoring the persistent tension between scaling rapidly and preserving profitability.
The stock had rallied roughly 35% over the prior month heading into Thursday’s session, leaving little cushion for negative headlines. JPMorgan recently cut its price target on SMCI to $28 from $40 while maintaining a “Neutral” rating. Analyst ratings are divided at 5 “Buy”, 10 “Hold,” and 4 “Sell,” with a consensus target of $33.33.
Options traders are eyeing a nearly 18% move over the next month, based on contracts that expire May 29. This puts the upper price target at $34.31 and the lower target at $24.05. The put call ratio for that same expiry is 0.28, indicating that bulls remain in charge.
www.barchart.comThis article was created with the support of automated content tools from our partners at Sigma.AI. Together, our financial data and AI solutions help us to deliver more informed market headline analysis to readers faster than ever.
On the date of publication, Sarah Holzmann did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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