Super Micro–Nvidia (NVDA) Ties in Spotlight amid Scandal. What One Top Analyst Sees

Analysts have started to question what implications the $2.5 billion chip smuggling scandal rocking Super Micro Computer SMCI -32.06% ▼ could have on the AI server maker’s long-standing partnership with chipmaking giant Nvidia NVDA -3.08% ▼ . This is despite SMCI’s clarification that it is not named as a defendant in the case and that the practice violates its policies.

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Analyst Flags Possible ‘Devastating Impact’ on SMCI

On Friday, Bernstein’s five-star analyst Mark Newman argued that the scandal “raises serious credibility issues” about Super Micro Computer and wondered if Nvidia will feel compelled “to further distance [itself] from SMCI.” Newman slapped a Market Perform (Hold) rating on SMCI and stuck to his price target of $37, which suggests about 68% upside.

According to the analyst, if Nvidia happens to decide to distance itself from the AI server maker, such a move could disrupt SMCI’s “important supply” of graphics processing units, which in turn could result in a “devastating impact” on the company.

In raising the question, the Bernstein analyst emphasized that while Nvidia’s products sit at the center of the case, the chipmaker “does not appear to have any fault here” as the charges instituted by the U.S. Attorney’s Office do not in any way suggest that Nvidia had any prior knowledge or link to the alleged smuggling.

Newman added that his team strongly believes that Nvidia takes its obligations under the current export control rules very seriously.

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Fears Rise about Disruption to NVDA-SMCI Ties

Questions around what possible impact the scandal could have on the ties between the two companies come at a time when they have just strengthened their long-running relationship.

At Nvidia’s annual developer conference that wrapped up on Thursday, Super Micro Computer pulled back the curtain on the BlueField-4 STX storage server, “one of the industry’s first” context memory storage servers.

The server is built in line with Nvidia’s new STX reference architecture — an AI data center hardware design blueprint Nvidia formally introduced at the conference. Super Micro also announced plans to bring new Nvidia AI acceleration technologies to the market.

Is SMCI a Good Buy Right Now?

Across Wall Street, analysts remain very cautious on Super Micro Computer’s shares and have a Hold consensus rating on the stock. This breaks down to three Buys, six Holds, and three Sells issued by 12 analysts over the past three months.

However, the average SMCI price target of $38.89 implies about 84% upside from current trading levels.

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