Jim Cramer’s Latest Game Plan: 15 Stocks to Watch

9. Super Micro Computer, Inc. (NASDAQ:SMCI)

Number of Hedge Fund Holders: 47

Cramer highlighted Super Micro Computer, Inc.’s (NASDAQ:SMCI) troubles with its auditors and hinted at what it could mean for the company.

“Now, the most intriguing story coming out next week is Super Micro. We know this company is on the firing line after its auditor, Ernst & Young, resigned noisily this week because they couldn’t swear by the numbers and no longer trust management. It’s suboptimal. I have no idea what Super Micro is gonna say. I do know this, ever since Ernst & Young resigned, one of Super Micro’s key competitors, Dell has seen its stock march relentlessly higher. I think that’s pretty ominous for Super Micro.”

Super Micro (NASDAQ:SMCI) is a company that specializes in the development and manufacturing of high-performance server and storage solutions. The company designs and assembles servers and rack systems for its clients in areas such as AI and data storage. One of the company’s distinguishing features is its early adoption of direct liquid cooling (DLC) technology for servers. This is especially important for AI-powered servers, which generate significant heat and consume large amounts of energy.

DLC provides an effective solution to keep these systems cool and operational, making it a preferred choice for enterprises seeking efficient, high-performance systems. The company recently reported a surge in demand for its products, particularly in the AI sector. The company now ships over 100,000 graphics processing units (GPUs) per quarter, which are critical for AI applications.

However, Super Micro (NASDAQ:SMCI) has faced some challenges recently. In September, the Wall Street Journal reported that the company’s accounting practices were under investigation by the Department of Justice (DOJ), which caused a significant drop in the company’s stock value. This negative momentum was further compounded when Ernst & Young, the company’s auditor, resigned.

The accounting firm cited concerns about the company’s governance, transparency, and internal controls as the reasons for its departure. Ernst & Young, which had begun auditing the company earlier in the fiscal year, stated that it was “unwilling to be associated with the financial statements prepared by management.”

In response, the company disagreed with the concerns raised by Ernst & Young and expressed confidence that no restatements would be necessary for its financial reports. The company is currently in the process of finding a new accounting firm to continue its audit.