- Why did SMCI fall more sharply and what does it mean for its business?
- Why did CoreWeave fall after strong earnings and how much does financing matter?
- What does the selloff mean for SMCI and CoreWeave’s valuations?
- Author’s Take: How should investors reassess SMCI and CoreWeave?
CoreWeave’s earnings had just sent its shares up almost 25%. The next day, Nvidia’s leadership change interrupted that rally, while fresh investigation reporting hit Super Micro Computer even harder.
On November 12, SMCI fell 11.30% and CoreWeave lost 6.86%. Both companies depend on Nvidia, but the developments raised different questions about their businesses: whether scrutiny could disrupt SMCI’s server sales and whether CoreWeave’s rapid expansion can generate enough profit after financing costs.
The distinction matters because a shared stock-market shock does not necessarily mean the same change in each company’s earnings outlook.
| Stock | November 12 closing price | Change from previous close |
| Super Micro Computer (SMCI) | $26.99 | −11.30% |
| CoreWeave (CRWV) | $56.60 | −6.86% |
Sources: Stock Analysis and Investing.com historical prices. Prices refer to the regular US session ending November 12, 2026, at 4 p.m. EST.
Why did Nvidia’s leadership change hit SMCI and CoreWeave stocks?
Nvidia announced Jensen Huang’s resignation on November 12 and appointed CFO Colette Kress as interim CEO. Its SEC filing records that the board accepted his resignation on November 11.
Super Micro Computer builds servers and computing systems incorporating Nvidia chips. CoreWeave rents computing infrastructure to businesses training and running AI models. Its latest quarterly filing says all GPUs used in its infrastructure are Nvidia GPUs.
Nvidia is also a CoreWeave shareholder and previously agreed to purchase certain unused computing capacity, subject to delivery requirements and other contractual conditions.
These connections explain why a sudden leadership change at Nvidia could affect confidence in both companies. Investors must consider whether technology launches, supply arrangements and commercial support will continue as expected.
However, the departure did not automatically cancel existing contracts. Nvidia’s board said it expected operations, customer commitments and its product roadmap to continue without interruption.
The disclosed change introduced uncertainty about future execution; it did not establish that chip deliveries or customer commitments had already been disrupted.
Why did SMCI fall more sharply and what does it mean for its business?
SMCI faced an additional concern involving the possible diversion of its products into China. That made the news directly relevant to its own distribution and compliance practices, beyond the uncertainty surrounding Nvidia.
What is the investigation about and what remains unresolved?
US investigators were reportedly examining whether companies linked to Alice Huang, a former Megaspeed executive, helped smuggle Supermicro products into China. The scrutiny was reportedly being led by the US attorney’s office in Manhattan. The reporting did not establish that Supermicro’s management knowingly approved illegal shipments.
Singapore’s November 12 statement added detail about the shipment trail. Authorities were examining whether servers exported through Singapore to Malaysia subsequently reached another destination, contrary to declarations made in Singapore.
Singapore said Supermicro had provided limited cooperation with requests for information. Supermicro disputed that account, saying it had cooperated with authorities and engaged with Singapore’s requests. It also said Megaspeed had never been its customer.
That customer statement addresses a direct commercial relationship. It does not, by itself, establish whether products reached other companies through intermediaries.
There is also an important distinction between internal and external investigations. Supermicro completed its internal review of earlier export-control allegations in August. It said the review found no evidence that current senior management knew of the alleged diversion scheme. The same announcement acknowledged continuing government investigations.
The internal review had ended; its completion did not close the external inquiries. The precise relationship between the newly reported scrutiny and earlier cases also remained unclear.
The potential business consequences include changes to distribution arrangements, additional compliance work or damage to customer confidence. Their financial size remains unknown. The available disclosures do not support assigning a specific revenue loss or fine to the latest reporting.
What do SMCI’s margins and cash flow reveal?
SMCI’s latest results show strong demand alongside a less straightforward profitability picture. For the quarter ended September 30, its first quarter of FY2027, revenue reached $19.9 billion and net income was $1.594 billion.
Gross margin was 12.7%, compared with 9.3% a year earlier and 17.5% in the preceding quarter. Gross margin measures what remains from sales after the direct cost of supplying products. SMCI therefore retained more gross profit per dollar of revenue than a year earlier, but less than in the previous quarter.
Part of the reported profitability came from approximately $157.6 million of tariff refunds recorded as a reduction in cost of sales. That benefit contributed about 0.8 percentage points to gross margin. Excluding only that refund, while leaving everything else unchanged, would produce a margin of about 12%.
This calculation isolates one benefit; it is not a forecast or a fully adjusted measure of normal profitability. It shows why investors should separate improvements in manufacturing and product mix from refunds relating to past costs.
The cash-flow picture needs similar attention. Operating activities used approximately $434 million despite the reported profit. Inventory and unpaid customer bills absorbed substantial funds, partly offset by customer advances. Fast growth can require spending before customers pay. The concern is whether shipments eventually produce cash collections, rather than leaving more money tied up in equipment.
That makes any additional disruption more consequential. Delayed deliveries or payments could prolong the funding requirement. The investigation reporting has not established that this happened, but SMCI’s cash conversion explains why the possibility matters.
Source: Supermicro’s September 2026 Form 10-Q, Supermicro’s Q1 FY2027 earnings release.
Why did CoreWeave fall after strong earnings and how much does financing matter?
CoreWeave’s decline followed an encouraging operating update. The Nvidia shock changed the immediate market backdrop, while its existing financing burden remained central to the investment case.
What improved in CoreWeave’s results?
CoreWeave reported Q3 revenue of $3.661 billion, approximately 168% above the year-earlier period. It generated $207 million of operating income and raised its full-year 2026 revenue guidance to 13.00-13.30 billion.
The company also reported $132.5 billion of revenue backlog. That represents expected future revenue under committed contracts, subject to delivery and service-availability requirements.
The backlog supports the demand outlook. Its value depends on installing the required infrastructure, making it available to customers and retaining enough profit from the services delivered. It should not be treated as cash already collected or earnings already secured.
The price sequence also matters. CoreWeave rose from $48.73 before the results to $60.77 on November 11. Its subsequent close of $56.60 left it approximately 16.2% above the pre-results price.
The November 12 decline therefore surrendered part of the earnings rally. It did not erase the market’s entire positive response to the results.
Source: CoreWeave’s November 10 results for the quarter ended September 30, 2026.
Why are borrowing costs and new funding still important?
CoreWeave’s Q3 net interest expense was $846 million, approximately 4.1 times its operating income. It reported a $709 million net loss. Strong sales growth has therefore yet to produce bottom-line profitability because financing costs exceed current operating earnings.
Management expected approximately $9 billion of customer prepayments and deposits over the following three months. Against that, its full-year capital-expenditure forecast was 37-39 billion. Customer advances help fund delivery, but they also carry obligations to provide future services.
Borrowing remains another source of funding. Management said it did not intend to issue additional parent-company unsecured debt at current yields through 2027. It continued to plan loans backed by infrastructure and customer contracts. Subsequent reporting described a proposed loan of at least $4 billion.
These are different forms of borrowing. Secured lenders have claims on specified assets and associated cash flows. The proposed loan therefore does not, by itself, establish a reversal of the decision to avoid expensive unsecured borrowing.
The financing plan provides a route to expansion, but its success depends on the final borrowing terms and timely delivery of revenue-generating capacity. Raising money and earning an adequate return on that money are separate tests.
Source: CoreWeave’s Q3 financial statements; CoreWeave’s November 10 results and outlook.
What does the selloff mean for SMCI and CoreWeave’s valuations?
The key valuation question is how much future profit and cash can reach each common share after other financial claims are met. That requires a different assessment for each company.
What matters most when valuing SMCI?
For SMCI, investors need to assess the earnings available to ordinary shareholders, rather than company-level profit alone.
Its capital structure includes mandatory convertible preferred shares with an aggregate liquidation preference of approximately $4.3 billion. Preferred dividends reduce earnings available to common shareholders, while eventual conversion increases the number of common shares under the securities’ terms.
This makes diluted earnings per share and sustainable cash generation more useful valuation measures than revenue growth alone. Investors may also pay less for each dollar of expected earnings while regulatory outcomes remain uncertain, even before profit forecasts change. The available disclosures do not support a precise valuation adjustment for that uncertainty.
Why does CoreWeave’s debt change the valuation picture?
CoreWeave’s market capitalisation measures the value of its ordinary shares. Including borrowings gives a broader view of the financial claims supported by the business.
| Component | Approximate value |
| Common-equity market value at November 12 close | $31.2 billion |
| Add: reported borrowings at September 30 | $46.9 billion |
| Subtract: unrestricted cash at September 30 | −$4.1 billion |
| Equity plus borrowings, less cash | $74.0 billion |
Sources: CoreWeave’s September 2026 balance sheet and November 12 market data; original calculation.
The table explains why the share price alone gives an incomplete picture of valuation. CoreWeave’s future cash flows must support substantial lender claims alongside shareholder returns.
Its valuation therefore depends on the returns earned from expansion after funding costs. Strong demand creates an opportunity; delivering that demand profitably determines how much value ultimately belongs to shareholders.
Author’s Take: How should investors reassess SMCI and CoreWeave?
Before deciding whether either stock looks cheaper, ask which assumption in its valuation needs to change. A price decline creates a different opportunity only if the business can still deliver the earnings and cash previously expected. If those expectations have weakened, the lower price may simply reflect a less valuable outlook.
For SMCI, separate temporary uncertainty from a lasting reduction in earning power. Build one scenario in which scrutiny causes no material disruption and another in which additional costs or sales constraints reduce profitability. Avoid assigning a precise financial penalty without evidence but equally, do not assume that an unquantified risk has no value impact. The useful question is how sensitive the valuation is to a less favourable outcome.
For CoreWeave, challenge the timing assumptions behind future growth. Consider what happens if infrastructure starts earning revenue later than planned while financing payments still fall due. A valuation that remains reasonable under a moderate delay offers a different proposition from one that requires every project to arrive on schedule.
Use these scenarios to identify what the current price appears to assume. Does it require a smooth recovery, allow for some setbacks or already imply lasting damage? Record those assumptions before the next announcement, then revise them only when new evidence warrants it. That gives investors a consistent basis for judging developments instead of letting each daily price move reset their expectations.