Super Micro Computer Stock Plunges 65% After Co-Founder's Indictment

Investors exit as Wally Liaw faces charges of bypassing US export restrictions to China

Mar. 31, 2026 at 5:23pm

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A highly detailed, glowing 3D illustration of a futuristic server rack or data center hardware infrastructure, bathed in neon cyan and magenta lights, conceptually representing the complex, high-tech nature of the AI computing hardware that Super Micro Computer supplies and the vulnerabilities and risks associated with the company's recent legal troubles.The legal troubles surrounding Super Micro Computer's co-founder cast a shadow over the company's role as a key supplier of AI infrastructure hardware.San Jose Today

Super Micro Computer (SMCI) stock has dropped around 65% since its peak in July 2024 after co-founder Wally Liaw was indicted for allegedly circumventing US export restrictions to China. Major investors like Tortoise Capital have exited their positions, with Zacks Investment Management calling the stock "uninvestable" due to the C-suite involvement. The company says it is cooperating with authorities, but the market remains skeptical as SMCI faces a pattern of regulatory and financial reporting issues.

Why it matters

Super Micro is a key supplier of AI infrastructure hardware, making it a critical player in the booming data center and cloud computing market. The indictment and stock plunge raise concerns about the company's governance, compliance, and ability to retain customers amid the fallout.

The details

Co-founder Wally Liaw was indicted for allegedly bypassing US export restrictions to China, prompting major investors like Tortoise Capital to exit their positions. Zacks Investment Management has called SMCI "uninvestable" due to the C-suite involvement. The stock has dropped about 65% since its peak in July 2024 and is now down 27% in 2026, trading at just over 7x forward earnings compared to its 10-year average of 12x.

  • In 2019, Super Micro failed to meet filing deadlines and was delisted from Nasdaq, only to be relisted in 2020.
  • In 2025, Zacks Investment Management exited its SMCI position.
  • On March 26, 2026, CEO Charles Liang pointed to new oversight measures and the appointment of a new acting chief compliance officer.
  • On March 31, 2026, Tortoise Capital sold its entire SMCI position from its Tortoise AI Infrastructure ETF.

The players

Wally Liaw

Co-founder of Super Micro Computer who was indicted for allegedly bypassing US export restrictions to China.

Charles Liang

CEO of Super Micro Computer who pointed to new oversight measures and the appointment of a new acting chief compliance officer.

Tortoise Capital

An investment firm that sold its entire SMCI position from its Tortoise AI Infrastructure ETF.

Zacks Investment Management

An investment firm that called SMCI "uninvestable" and exited its position in 2025.

Gabelli Funds

An investment firm that still holds SMCI in its Gabelli Global Technology Leaders ETF.

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What they’re saying

“The indictment was basically the driving factor behind us getting out.”

— Rob Thummel, Senior Portfolio Manager, Tortoise Capital

“In our view this is an uninvestable stock. Especially since the C-suite is involved, we would sit this out for the foreseeable future.”

— Brian Mulberry, Chief Market Strategist, Zacks Investment Management

“The fact that he's gone I think helps, and they're apparently cooperating with the DOJ, which is great.”

— Louis Navellier, Founder, Navellier & Associates

What’s next

The judge overseeing the case against Wally Liaw will decide in the coming weeks whether to allow him to be released on bail.

The takeaway

The indictment of Super Micro's co-founder and the company's history of regulatory and financial reporting issues have shaken investor confidence, raising questions about the long-term viability of the business and its ability to retain customers in the competitive AI infrastructure market.