Why Super Micro Computer Shares Are Falling On Thursday? - Super Micro Computer (NASDAQ:SMCI)

Super Micro Computer Inc. (NASDAQ:SMCI) shares cratered during Thursday's session. The sell-off follows reports that Oracle Corp. (NYSE:ORCL) reportedly canceled a massive server contract.

• Super Micro Computer stock is feeling bearish pressure. What’s behind SMCI decline?

Oracle Cuts Billion-Dollar Deal

According to Bluefin Research, Oracle canceled an order for 300 to 400 NVIDIA Corp. (NASDAQ:NVDA) GB300 NVL72 racks. Each rack carries a $3.5 million price tag, reported Investing.com. This represents a total contract loss between $1.1 billion and $1.4 billion. Bluefin estimates SMCI shipped only 100 to 200 racks before the termination.

Legal Allegations Drive Shift

Bluefin research indicates the cancellation stems from serious legal headwinds. Sources cite the indictment of an SMCI co-founder for smuggling artificial intelligence Graphics Processing Unit (GPU) into China. Reportedly, Wiwynn secured the redirected rack business following the fallout.

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Inventory and xAI Hurdles

Bluefin note also highlights a slowdown in business with Elon Musk's xAI. While SMCI completed Colossus 2 shipments, new demand shifted to Dell Technologies Inc. (NYSE:DELL) and Hewlett Packard Enterprise Co. (NYSE:HPE). Consequently, SMCI struggles with “considerable” excess B200 GPU inventory that it cannot move.

Super Micro Computer and Oracle did not immediately respond to Benzinga's request for comment.

Short Interest Landscape

The short interest recently decreased from 88.48 million to 83.19 million shares. Currently, 18.31% of the float remains short. Traders should note that it would take 1.35 days for shorts to cover at average volumes.

Critical SMCI Levels To Watch Amid Downtrend

SMCI is still in a longer-term downtrend when you zoom out, with the stock sitting far below its $62.36 52-week high and under its 200-day trend line. At $26.95, the stock is trading 8.2% above its 20-day simple moving average (SMA) but 9.8% below its 100-day SMA.

The moving average structure stays heavy: the 20-day SMA is below the 50-day SMA.

Key Resistance: $32
Key Support: $19.50

SMCI Stock Price Activity: Super Micro Computer shares were down 7.15% at $27.09 at the time of publication on Thursday, according to Benzinga Pro data.