Mackenzie Tatananni

Shares of Super Micro Computer powered higher in premarket trading Tuesday to snap a five-day losing streak. But investors are wary the volatile stock could snap back.

Super Micro stock climbed 4.2% to $41.79 in early trading while futures tracking the benchmark S&P 500 and tech-heavy Nasdaq Composite were up 1.4% and 1.5%, respectively. The stock remains up 31% month-to-date, heading for the largest monthly gain since a 45% jump in February, according to Dow Jones Market Data.

Shares of the server maker have been particularly volatile since the start of 2024, when they exploded on the artificial-intelligence boom. Multibillion-dollar commitments from Microsoft, Amazon.com, and peers to build out hyperscale data centers only reaffirmed Wall Street's enthusiasm.

But investors hoping for another Nvidia moment quickly had their hopes dashed. Questions swirled around the health of the business after auditor Ernst & Young resigned in October 2024. Two months later, Super Micro was granted an exemption to a Nasdaq listing rule, giving it until February 2025 to file delayed financial reports.

Shares wavered earlier this year as investors waited to see whether the company would avoid removal from the index. While it narrowly made the Feb. 25 deadline, this development was followed by a market correction in March, with Super Micro seeing the largest decline out of any stock in the S&P 500.

It hasn't been smooth sailing since then. Margin pressure, competition, and disappointing financial results have all weighed on the price. The stock slid earlier this month after the server maker supplied weak guidance for the fiscal fourth quarter ending June 30.

As of April 30, Super Micro stock had a three-year beta, a relative measure of volatility, of 1.89. A value greater than 1 indicates a greater degree of variability than the broader market while a value less than 1 suggests the opposite.

A number of investors are placing bearish bets on Super Micro. In fact, the stock was the most-shorted S&P 500 stock in April as a percentage of its float. Historical data stretching back to 2010 show the stock is at its most-shorted in nearly a decade, with 21.3% of shares sold short.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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May 27, 2025 08:40 ET (12:40 GMT)

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