Hindenburg takes aim at AI server maker Super Micro with short position

Hindenburg Research on Tuesday disclosed a short position in Super Micro Computer and alleged "accounting manipulation" at the AI server maker, the latest by the short seller whose reports have rocked several high-profile companies.

The report pits the short seller, which has tussled with billionaire-investor Carl Icahn and India's Gautam Adani, against the server marker that has been one of the biggest winners of the generative artificial intelligence boom.

Shares of Super Micro were down 3.5% in morning trade. The stock has nearly doubled in 2024, after more than tripling last year.

Hindenburg said it found evidence of undisclosed related party transactions, failure to abide by export controls, among other issues, citing an investigation that included interviews with former senior employees and litigation records.

"It (Super Micro) benefited as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition," Hindenburg said in its report.

Super Micro did not immediately respond to a request for comment. Reuters could not independently verify the claims in the Hindenburg report.

Close ties with chip giant Nvidia have allowed Super Micro, known for its liquid cooling technology for high-power semiconductors, to capitalize on the surge in demand for AI servers.

Though revenue has surged, margins have taken a hit recently due to the rising costs of server production and pricing pressure from rivals including Dell.

Analysts have flagged the company's hefty spending on supporting new generation of AI chips, including those sold by Nvidia.

The company's shares have also come under pressure in recent months on rising worries that Big Tech could scale back AI spending due to slow payoffs from the billions of dollars they are investing in the technology.