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Super Micro Computer Inc. Gains 23% After Filing Delayed Financial Reports

Super Micro Computer Inc. saw a significant surge in its stock, gaining 23% in premarket trading following the submission of outstanding financial reports to comply with Nasdaq Inc. rules. This move alleviated concerns about the server maker potentially being delisted. The company reported its 2024 fiscal year results in a filing with the Securities and Exchange Commission, along with financial statements for the quarters ended September 30 and December 31.

Super Micro had been under pressure to avoid delisting after missing an August 2024 deadline to file its annual financial report for the year ending June 30. The company’s auditor, Ernst & Young LLP, resigned in October, citing concerns about governance and transparency. Additionally, Super Micro is facing a US Department of Justice probe following a report from short seller Hindenburg Research.

Nasdaq extended Super Micro’s deadline to February 25, 2025, to provide the delayed filings and regain compliance with listing rules. In December, Super Micro announced an independent review of its business, which found no evidence of misconduct. However, the company pledged to install a new chief financial officer and other top executives.

In a statement, Super Micro confirmed that it had regained compliance with the filing requirements, and the matter is now closed. The company acknowledged that internal controls over financial reporting were not effective and has initiated remediation measures. Despite this, Super Micro warned that it may fail to remediate material weaknesses in its internal control over financial reporting.

Super Micro also highlighted potential risks, including failing to recapture lost businesses or business opportunities due to ongoing reputational harm. Earlier this month, Chief Executive Officer Charles Liang noted some negative business impacts due to the filing delays.

In lieu of audited financial information, Super Micro had provided “business updates” in recent quarters with preliminary sales and profit results. The company recently gave a much stronger-than-expected sales outlook of $40 billion for the fiscal year ending in June 2026.

Western Brands Face Competitive Russian Markets as They Consider Return

MOSCOW (Reuters) – As U.S. President Donald Trump suggests a swift end to the Ukraine conflict, speculation grows that Western brands may consider returning to Russia. However, the markets they vacated have become more competitive, dominated by domestic and Chinese brands.

Henderson, a men’s clothing chain, has benefited from the departure of foreign retailers, securing better locations within shopping centers and growing sales three times faster than the overall 8% annual growth of the menswear market. Despite this, Western brands remain available in some locations, having transformed their sales channels.

Shopping malls’ prime locations, once reserved for Western flagship stores, are now occupied by Russian rivals. Pavel Lyulin, vice president of the Shopping Centres Association of Russia, Belarus and Kazakhstan, notes that these prime spots are highly contested due to long-term contracts.

Moscow is unlikely to welcome returning brands with open arms. President Vladimir Putin has emphasized the preferential treatment of Russian manufacturers if foreign firms return. Kirill Dmitriev, Putin’s special envoy on international economic and investment cooperation, expects some U.S. companies to return as early as the second quarter of this year.

Over a thousand Western companies have exited Russia since the conflict began, with many citing costs, disruptions from sanctions, and payment issues. The retail sector has yet to fully recover, with shopping centers still seeing 20% fewer visitors than in 2019. However, Russian shoppers have embraced local brands, finding them comparable in quality to Western ones.

Stockmann, a retailer that acquired Hugo Boss’ Russian business, has observed an increase in sales of domestic brands. Moscow resident Anastasia Efremova notes that while Russian brands have raised prices, the impact has been minimal, with everything in stock, including spare car parts.

Foreign carmakers’ departure left a gap filled primarily by Chinese competitors, which now account for more than 50% of new car sales. Domestic carmakers account for about 30% of sales, up from closer to 20% before February 2022.

Western companies are currently ruling out imminent returns. Executives from Arla Foods and InterContinental Hotels have stated there are no plans to re-enter the Russian market for now. Renault has also indicated that returning under the terms agreed when exiting in 2022 is “very unlikely.”

Russian brands are confident in their market share and are prepared to compete with international players if they return. Ultimately, consumers want the freedom to choose, as expressed by Moscow resident Laysen Faskhutdinova.

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Why stock market worries about tariff uncertainty might be a ‘red herring’: Morning Brief

The stock market is trading near record highs, but the vibes feel off. Last week’s sell-off brought out a laundry list of possible triggers, ranging from weak manufacturing data to rising inflation expectations to, of course, the impact of tariffs on consumers and across the economy.

But according to Neil Dutta, head of economics at Renaissance Macro, talk about the last item on that list simply covers up what the first two suggest: The US economy is slowing down. In an email on Monday, Dutta flagged four concerning developments for the economy that are largely the inverse of what led him to be among the leading voices on Wall Street arguing in favor of a “no landing” scenario back in 2022. The consumer is softening as income growth falls, housing is weak, government spending is slowing, and Wall Street expects the US economy to continue growing at around 2.5%, in line with each of the last three years.

“If 2023 was about being surprised to the upside, there is more risk in 2025 of being surprised to the downside,” Dutta wrote. “Much of what we see in the financial press — tariffs, uncertainty — is a red herring, an ex-post rationalization for an economic slowdown that was already in motion.”

Late last month, Fed Chair Jay Powell said the US economy was in “quite a good place” when outlining the Fed’s rationale for pausing rate cuts. This assessment also helps explain why Powell seemed content not to push back on market expectations paring back their bets for further cuts. Asked about the impact of tariffs on the economy, Powell said “significant” shifts around tariffs, immigration policy, fiscal policy, and regulations each created “additional uncertainty” for the economic outlook.

Still, the Fed chair appeared largely unbothered. In Dutta’s view, however, the Fed’s slowdown in rate cuts has created a “passive tightening of monetary policy [that] is the dominant risk and that has important implications for financial market investors.” In other words, by pausing rate cuts into a slowing economy, the Fed is de facto raising rates. Going forward, Dutta expects long-term rates and stocks to fall as rate cuts and an economic slowdown are priced in and the job market further slows.

What’s notable in Dutta’s call is that he doesn’t dredge up some obscure piece of alternative data the market hasn’t yet priced in or outline an involved three-leg parlay of sentiment, valuations, and positioning. Rather, it looks at the basics: how much people get paid, how much it costs to live, and what the government is doing to help. And none of the trends are great.

Citadel Securities Plans to Enter Crypto Trading Amid Trump’s Support

Citadel Securities, the market-making giant led by Ken Griffin, is planning to become a liquidity provider for cryptocurrencies, capitalizing on President Donald Trump’s endorsement of the industry. This move marks a significant shift from the firm’s previous cautious approach to crypto market-making.

Citadel Securities has historically avoided crypto exchanges popular with retail investors due to regulatory uncertainties in the US. However, the firm now aims to join the roster of market makers on various exchanges, including those operated by Coinbase Global Inc., Binance Holdings, and Crypto.com. The firm intends to establish market-making teams outside the US initially, pending regulatory approval.

The decision to enter the crypto market is influenced by the potential for new regulations that could provide clarity and attract institutional investors. Citadel Securities has collaborated with brokerage firms like Charles Schwab and Fidelity Investments to create EDX Markets, an institution-only crypto exchange that went live in 2023. This platform offers trading in crypto products exclusively for institutional investors.

The financial industry anticipates increased activity in digital assets under the Trump administration, which has pledged to make the US the “crypto capital of the planet.” Trump has taken steps to overhaul regulations that hindered crypto activity during President Joe Biden’s tenure, including issuing an executive order on digital assets and establishing a crypto task force at the US Securities and Exchange Commission.

Citadel Securities, which has expanded from a small group supporting Griffin’s hedge fund to a global trading powerhouse, aims to provide liquidity for digital assets similar to how it operates in other asset classes like equities and fixed income. The firm’s entry into crypto trading could reshape the landscape, especially if the US adopts clearer regulations for digital asset investing.

Palantir Technologies Inc. shares experienced a significant downturn last week, with a four-day drop marking the largest decline since 2022. This downturn followed news that Defense Secretary Pete Hegseth plans to reduce projected US military spending by 8% over the next five years, potentially impacting Palantir’s revenue, which is heavily reliant on government contracts. Despite the selloff, some investors remain optimistic about Palantir’s long-term prospects, citing the company’s strong performance in the artificial intelligence sector and its potential to benefit from increased government spending on tech and AI.

Palantir’s stock fell 4.6% on Monday, contributing to a more than 20% drop over the four-day period. The company, which has seen its market value increase by almost $190 billion in the past year, stands out among tech firms for its significant revenue share from the US government. Over 40% of Palantir’s 2024 revenue is US-government related, with the US Army accounting for 22% of its government revenue. This exposure to government spending has become a major concern, especially with President Donald Trump pledging to cut federal spending.

Despite the risks, some analysts believe that Palantir’s unique software approach will enable the company to gain more IT budget dollars at the Pentagon, and that budget cuts could ultimately be a positive growth catalyst. Palantir remains one of the best-performing components of the Nasdaq 100 Index this year, up about 28%, and has defied naysayers before, rallying on the back of a strong revenue forecast. The company reported “untamed organic growth” for its AI software.

However, the stock’s elevated valuation remains a concern, trading at more than 170 times estimated earnings, making it the most expensive component of the S&P 500 Information Technology Sector. More than half of the analysts tracked by Bloomberg have hold ratings on the shares, with six recommending a buy and five suggesting to sell. Despite the risks, some investors remain confident in Palantir’s long-term potential, particularly with the Pentagon.

Microsoft Cancels US Data Center Leases, Raising AI Capacity Concerns

Microsoft Corp. has canceled some leases for US data center capacity, according to TD Cowen, sparking concerns about whether the tech giant is securing more AI computing capacity than it needs in the long term. The US brokerage reported that Microsoft has voided leases totaling “a couple of hundred megawatts” of capacity, equivalent to roughly two data centers, and has pulled back on converting statements of qualifications into formal leases.

The exact reasons for Microsoft’s lease cancellations are unclear, but TD Cowen suggested that the company may be in an oversupply position. The brokerage also posited that Microsoft could be reallocating some of its in-house investment to the US from abroad. Microsoft reiterated its spending target for the fiscal year ending June but declined to comment on TD Cowen’s note.

The potential lease pullback raises questions about whether Microsoft, a frontrunner in AI among Big Tech companies, is growing cautious about the outlook for overall demand. The company has said it expects to spend $80 billion this fiscal year on AI data centers and has pledged to sustain spending to meet “exponentially more demand.”

European stocks tied to the energy sector dropped on the report, which may suggest that Big Tech companies will need less power to run their data centers. Critics have consistently pointed out a dearth of practical, real-world applications for AI, even as Microsoft, Meta Platforms Inc., Alphabet Inc., and Amazon.com Inc. have pledged to spend billions on the data centers needed to train, develop, and host AI services.

Microsoft executives have played down concerns about AI overcapacity, stating that the company’s plans to spend over $80 billion on infrastructure this fiscal year remain on track as it continues to grow at a record pace to meet customer demand. Rivals have also doubled down on their AI spending commitments, with Amazon, Alphabet, and Meta pledging to spend $100 billion, $75 billion, and up to $65 billion, respectively, on AI infrastructure. Chinese e-commerce giant Alibaba Group Holding Ltd. said it would invest more than 380 billion yuan ($53 billion) over the next three years as it seeks to become a leader in the field.

TD Cowen’s analysts wrote that their channel checks had unearthed a number of signs that Microsoft is gradually retreating, including letting more than a gigawatt of agreements on larger sites expire and walking away from “multiple” deals involving about 100 megawatts each. Microsoft used facility and power delays as justification for the termination of leases, a tactic rivals such as Meta previously employed when curbing capital spending.

Large cloud hyperscalers typically use a mixture of leased and owned data centers across many locations, so investors should expect some degree of “tweaking” of plans, according to Mizuho Securities analyst Jordan Klein. Microsoft’s alliance with OpenAI may also be evolving in ways that mean the software giant won’t need the same kind of investments. In January, Microsoft said it would alter its multiyear deal with OpenAI so the AI startup could use cloud-computing services from rival providers. Microsoft, which had been the company’s exclusive cloud provider, still has a right of first refusal when OpenAI seeks computing horsepower to train and run its AI models.

Nvidia Set to Report Q4 Earnings Amidst Tariff and Export Control Threats

Nvidia (NVDA) is set to release its fourth-quarter earnings report after market close on Wednesday, drawing attention from analysts and investors eager to gauge the impact of tariffs and export controls on its performance. The AI chip leader is expected to report earnings per share (EPS) of $0.84 on revenue of $38.2 billion, marking a 63% increase in EPS and a 73% jump in revenue compared to the same period last year. However, this growth, while substantial, may be viewed as a slowdown by investors given the company’s previous year’s performance, which saw a 486% increase in EPS and a 265% rise in revenue.

The data center segment is anticipated to drive the majority of revenue, reaching $34 billion, with gaming contributing $3 billion. The remainder will come from professional visualization, automotive, and OEM segments. Despite the impressive growth, concerns loom over potential tariffs on chips imported from Taiwan, where many of Nvidia’s processors are manufactured, and further export restrictions on shipments to China, a significant market for the company.

Nvidia’s dominance in the AI chip market is under scrutiny as competitors like Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Microsoft (MSFT) invest heavily in developing their own AI solutions. While these companies currently rely on Nvidia for their AI needs, the development of more efficient AI models by entities like DeepSeek could shift the market dynamics, potentially leading to a preference for less expensive chips.

Nvidia CEO Jensen Huang has argued that the development of powerful AI models like those by DeepSeek actually incentivizes the use of high-powered chips, countering fears that such models would reduce demand for top-tier processors. However, the threat of custom AI chips developed by tech giants poses a challenge to Nvidia’s market position. Despite these challenges, analysts believe that Nvidia’s mature ecosystem and the difficulties faced by alternatives in gaining traction suggest that the company remains well-positioned in the AI space.

As the tech sector braces for the earnings report, the market’s reaction will be closely watched, especially in light of the recent volatility in AI stocks and the broader tech sector’s performance at the start of the year. The report will provide crucial insights into how Nvidia is navigating these challenges and maintaining its leadership in the AI chip market.

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One ridiculous chart on Nvidia ahead of earnings

Nvidia (NVDA) stands out as one of the most undervalued AI stocks, trading at a forward price-to-earnings (P/E) multiple of 31, compared to Broadcom (AVGO) at 35 times, Marvell Technology (MRVL) at 41 times, and Arm Holdings (ARM) at 76 times. Even among the “Magnificent Seven,” Tesla (TSLA) trades at 121 times forward earnings, Amazon (AMZN) at 36 times, and Meta (META) at 26 times.

Two reasons might explain this odd valuation. Firstly, analysts may be undervaluing Nvidia’s earnings potential. Despite aggressive capital expenditure assumptions by hyperscalers like Amazon and Meta, Wall Street has not increased its 2025 earnings per share (EPS) estimates for Nvidia in over 60 days.

Secondly, the stock might be in a wait-and-see mode. Although shares have rallied from February lows, they have underperformed the S&P 500 this year, reflecting concerns over the China trade war and DeepSeek’s bullish AI thesis.

Despite these concerns, KeyBanc analyst John Vinh notes that “Nvidia remains uniquely positioned to benefit from AI/ML secular data center growth within the industry. With significant barriers to entry created by its CUDA software stack, we see limited competitive risks and expect Nvidia to continue to dominate one of the fastest-growing workloads in cloud and enterprise.”

The market may soon clarify this valuation disparity. On February 26, after the close, Finance will host a live special on Nvidia earnings, running from 4 p.m. to 6 p.m. ET. The next day, a roundtable discussion with Nvidia experts will air at 8:30 a.m. ET on Finance’s Opening Bid podcast. Tune in via the Finance homepage, app, or major streaming platforms.

Fed-Favored Inflation Gauge Expected to Ease to Seven-Month Low

The Federal Reserve’s preferred inflation metric is expected to cool to the slowest pace since June, but overall progress on taming price pressures will keep policymakers cautious about lowering interest rates further. The core personal consumption expenditures price index, which excludes often-volatile food and energy costs, is likely to rise 2.6% in the year through January, according to the median estimate in a Bloomberg survey of economists. Overall PCE inflation is also expected to ease on an annual basis, but components that registered strong increases in the consumer price index will keep the PCE running above the Fed’s 2% target.

Michael Barr is due to speak for likely his last time as the central bank’s vice chair for supervision as he prepares to step down at the end of the month, while Richmond Fed President Tom Barkin and Cleveland’s Beth Hammack are among others scheduled to deliver comments. At the same time as the PCE report, the Commerce Department will release the latest goods-trade balance, which widened to a record in December and will be a key focus for President Donald Trump in his second term.

Other data due for release in the coming week include new-home sales, consumer confidence and the government’s second estimate of fourth-quarter growth. Meanwhile, investors will continue to watch Trump’s efforts on tariffs and Elon Musk’s push to slash the size of the federal government.

In Canada, gross domestic product data for the fourth quarter is likely to show an economy picking up steam following aggressive rate cuts — though that momentum may stall as the looming trade war weighs on business investment.

Elsewhere, Germany’s election, inflation in Australia and the biggest euro-zone economies, and a rate cut in South Korea may be among the highlights. The Bank of Korea will be in the spotlight on Tuesday when authorities decide whether to resume the rate-cut cycle. The Bank of Thailand is seen holding its benchmark at 2.25%, though Bloomberg Economics expects pressure to continue for another cut later this year. Fresh off its first rate cut since 2020, the Reserve Bank of Australia will get consumer inflation data that’s forecast to show price gains accelerated marginally for a third month in January.

Japan publishes CPI data for Tokyo that may show inflation in the capital stayed elevated in February, while Singapore’s core CPI gains probably moderated to 1.5% in January. Sri Lanka releases CPI statistics on Friday. China reports preliminary PMI data for February on Saturday, with a key being the extent to which the manufacturing gauge recovers after a lunar-holiday dip in January. Bloomberg Economics expects the data to reinforce the case for policy support.

Taiwan reports preliminary gross domestic product figures for the fourth quarter on Wednesday, and trade data are due during the week from the Philippines, South Korea, Sri Lanka, Thailand and Hong Kong.

The aftermath of Sunday’s election in Germany will be the focus for investors. The pro-business CDU/CSU bloc, led by Friedrich Merz, is expected to take the biggest vote share after a campaign that often dwelled upon the country’s dismal economic record under Chancellor Olaf Scholz. Recent upticks in investor confidence and among purchasing managers likely came too late to help the incumbent. Similarly, the closely-watched Ifo business sentiment report on Monday is expected to show the highest reading since October.

One of the main questions following the snap ballot will be the future of Germany’s so-called debt brake, a topic that’s preoccupied Bundesbank President Joachim Nagel for some time. Reporters may quiz Nagel on that topic when he presents his institution’s annual report on Tuesday. He’s also likely to use the opportunity to comment on the European Central Bank’s next steps. A pre-meeting quiet period will then begin before the March 6 decision.

In an interview published Sunday, ECB Governing Council member Jose Luis Escriva said monetary policy must be approached with caution given the current “extraordinary uncertainty.” “It’s very difficult to gauge the impact of events that are unfolding,” the Spanish central bank chief told La Vanguardia newspaper. “It’s advisable to be cautious, especially from the point of view of monetary policy; wait for doubts around certain issues to be cleared, see how the different geopolitical dynamics are resolved.”

Data that may draw attention in the euro region in the coming week include inflation on Thursday and Friday from its four biggest economies, with economists anticipating outcomes ranging from slowing in Germany and France to a stable outcome in Spain and an uptick in Italy. In the UK, meanwhile, several speeches by Bank of England policymakers are scheduled, including Deputy Governors Clare Lombardelli and Dave Ramsden.

Elsewhere in Europe, Swedish, Czech and Icelandic gross domestic product numbers for the fourth quarter will be released. In South Africa, data on Wednesday will likely show inflation quickened to 3.2% in January from 3% a month earlier.