4 ms·

Super Micro stock was clearly undervalued even on traditional P/E metrics as recently as 2022. And I believe the reason for the depressed stock price was Bloomb

by pavlov 3y ago

Super Micro stock was clearly undervalued even on traditional P/E metrics as recently as 2022. And I believe the reason for the depressed stock price was Bloomberg’s allegations that China was using Super Micro’s motherboards as Trojan horses for spy chips: https://www.datacenterdynamics.com/en/news/years-later-bloomberg-doubles-down-disputed-supermicro-supply-chain-hack-story/ https://www.datacenterdynamics.com/en/news/years-later-bloom... Bloomberg originally broke this story in 2018, then repeated the allegations in 2021. But AFAIK it was never proven. The Nvidia + Meta connection finally broke the spell and allowed investors to look at SMCI with fresh eyes.

diggan 3y ago
> Bloomberg originally broke this story in 2018, then repeated the allegations in 2021. But AFAIK it was never proven. Isn't that libel? Or something similar at least, not super familiar with US laws.
- pavlov 3y ago
  My amateur understanding is that it’s very hard to successfully sue journalists for libel in the US because you’d have to prove malicious intent. A journalist writing a story based on their sources may have been misled by someone with an agenda, but didn’t write the false story with active malice.
  - ghaff 3y ago
    As someone who has done journalism, that's basically correct. All indications are that simultaneously the story wasn't true and the reporter and all their editors firmly believed it was true. My personal assumption is that they believed the story was solidly sourced but they were misled. ADDED: Standards are somewhat different between private people and public people/corporations.
    - GauntletWizard 3y ago
      I'm glad the story ran, even if it wasn't true - because it opened people's minds to the idea that this was happening. And it is a very real possibility. O.MG is a hobbyist project, but there's no question that the NSAs dirty tricks book, ANT/TAO[1] has something similar, but far more capable. We should all be paying attention to hardware suppliers and making sure that objects are "as-ordered", but today even a standard chip packaging can hide a ton of malicious logic. [1]https://en.m.wikipedia.org/wiki/ANT_catalog https://en.m.wikipedia.org/wiki/ANT_catalog
      - WarOnPrivacy 3y ago
        > I'm glad the story ran, even if it wasn't true - because it opened people's minds to the idea that this was happening. By 2018, all the eyes that could be opened already were. It's true that there were people that aren't convinced by the well-evidenced reporting from the Snowden, etc revelations. Of that group, I can't see Bloomberg's low-evidence story as what finally opened their eyes.
      - mschuster91 3y ago
        > We should all be paying attention to hardware suppliers and making sure that objects are "as-ordered", but today even a standard chip packaging can hide a ton of malicious logic. For smartphones, laptops and PCs that is relatively easy to defend against if you think you might be a target for three-letter agencies - just walk into a computer store and buy what they have on the shelf with cash. Even the NSA doesn't have the resources to intercept and modify all the shipments to Apple, Best Buy, Costco and whatnot - and I'd guess at least Apple has pretty strict security in their supply chain given that Apple stuff has insane value even just for parts if someone were to intercept a delivery. Network architecture however, that is more complex. Cables, Ubiquiti, HP and Dell stuff, you can buy that off the shelf, so same advantage. But servers? Good luck finding ones on the shelf anywhere.
        simne 3y ago
        > Even the NSA doesn't have the resources to intercept and modify all the shipments Your words are close to truth, but not equal to it. I don't know exact resources of NSA, but I know businesses in exUSSR, who done exactly what you say with smartphones and audio/video. This was grey scheme of import, with which imported more then 90% of tech in these countries, and this was reason, why Sony was condemned in Russia in 90s "for extremely low quality" (because local Sony representatives participated in scheme and central office closed eyes on this). So, in Eastern Europe that time existed zero import taxes for electronics. They imported electronics, disassembled it to parts, and exported to exUSSR as garbage; then these parts reassembled in garages and sold in ordinary shops as new devices. As I said, more then 90% reassembled, only less than 10% imported as ordinary contraband, or officially imported. For scale, as I remember, US have about 300mln population, Russia have 140mln, approx half (sure, Russians have much less purchasing power, but it is hard to estimate now, if may help, Russia GDP is very close to Italy with about 59mln population). > Apple has pretty strict security in their supply chain Must admit, Apple have better security than other manufacturers, but grey iPhones still sold in Russia, so real hackers found ways.
  - kevin_thibedeau 3y ago
    The source in this case admitted that he presented a hypothetical scenario with a random SMD component as an example. The ignorant Bloomberg employee embroidered that into a lie.
    - underlipton 3y ago
      >Ignorant Never attribute to ignorance what can be explained by malice and corruption (post-GFC/Madoff, finance and its cottage industries no longer get the benefit of the doubt).
- verticalscaler 3y ago
  First we had too big to fail, now we have too stupid to fail.
1letterunixname 3y ago
Meta is wasting all kind of money ($40B across 2 years) on Nvidia, SMCI, and their own gear. SMCI and Nvidia stocks are now overvalued because there are no fundamentals to sustain this business. OpenAI/Microsoft may be an exception, but Meta is wasting money it doesn't have on profits that aren't there. These data centers and servers are being built on orders of Zuck without a concrete, specific product or purpose for their use. This is akin to a newbie business owner buying lots of inventory without orders.
- fragmede 3y ago
  you know the saying; the market can stay irrational longer than you can stay solvent and all that. turns out P/E ratios determine a theoretical floor for the price, but as we've seen with Tsla and crypto, this shits all vibes anyway. AI isn't slowing down, or going to go anywhere, so these stocks, overvalued though you might see them, aren't going to go down anytime soon, in my opinion, so while what your say is true, NVDA and smci are safe to hold. the real question is what's going on with tsmc and mu, given their proximity to NVDA, and their lack of a pop.
  - solumunus 3y ago
    Currently TSM isn’t guiding much growth, I would guess we see an uptick in guidance in their next earnings report.
    - _zoltan_ 3y ago
      they report earnings monthly.
      - solumunus 3y ago
        They report some things monthly and they do a full earnings report quarterly.
  - epolanski 3y ago
    It's interesting you mention Tesla, because their sales clearly show that the growth expectation was not realistic. And in case of Nvidia it's even much worse. In order for Nvidia to be worth a decent premium over the yield of some index fund like VOO (you're taking much more risk), it has to grow in the order of 42% per year for a decade in revenue. There's no such amounts of money to be spent in hardware, it's lunacy. Not even the other tech giants combined have even a small part of the money required for such growth. And on top of that, this is a very dynamic sector where any competitor, technological breakthrough can make you the new IBM. Prices like Nvidia were highly overvalued but understandable with a stretch of imagination of 25% growth for a decade when it was 300$. I could almost see it and would've still concluded it was an unlikely outcome and risk/reward ratio was not there. But now we long past that mark and in the territory of insane expectations and high premiums paid with a very high risk.
hello_computer 3y ago
I think most consumer market "reporting" is poorly-disguised market-manipulation. Best advice for your portfolio is to tune all of those assholes completely out.
- underlipton 3y ago
  Something fun: pay attention to how many financial news headlines are formatted, "X as Y" or "Statement Presented as Fact: Says Opinion-Haver". The first implies that there's some causational link between X and Y, when none might exist; the writer can claim that they were just stating that two events were happening in tandem. The second biases a reader before they receive the crucial information that the preceding statement was not, in fact, fact. (Also, lately, look out for listicles of stocks "to buy" (not financial advice, of course) and "Forget X".)
zettabomb 3y ago
That was such an incredibly ridiculous story. I spoke with more than a few supposed infosec "professionals" who believed it entirely too. Never mind that there were zero reports from other journals (you know, like anything even slightly technical), that none of the cited sources would reiterate what they had supposedly said, or that the claimed mode of operation wasn't even possible. Their follow-up, despite having been disproven numerous times over, was even more ridiculous.
- toast0 3y ago
  If I'm assuming everyone involved had good intentions, the best thing I can guess is someone was speaking to the writer about the potential of the BMC being used for spying and got some details mixed up. Consider: the BMC has access to the system via PCI-e, as well as kvm and comport. In some systems, the BMC is in the path of the main NIC. There have been some major software flaws in BMC software, including revisions that SuperMicro shipped, where passwords could be bypassed in the network interface. Stuff like this https://web.archive.org/web/20140625065505/http://blog.cari.net/carisirt-yet-another-bmc-vulnerability-and-some-added-extras/ https://web.archive.org/web/20140625065505/http://blog.cari.... and other things on this page http://fish2.com/ipmi/ http://fish2.com/ipmi/ are all pretty nasty if you thought IPMI was secure in the neighborhood of 2014.
  - WarOnPrivacy 3y ago
    > If I'm assuming everyone involved had good intentions, the best thing I can guess is someone was speaking to the writer about the potential of the BMC being used for spying and got some details mixed up. I can't judge their intentions. But Bloomberg doubling down on the story in 2021 strongly discounts the possibility that the original reporting was based on any kind of bad info. ref: https://www.datacenterdynamics.com/en/news/years-later-bloomberg-doubles-down-disputed-supermicro-supply-chain-hack-story/ https://www.datacenterdynamics.com/en/news/years-later-bloom... Three years is a long time to believe in bad data, with everyone everywhere pointing out the same issues with their story.
    - 3y ago
darth_avocado 3y ago
The low valuation had less to do with the spying allegations and more to do with a history of accounting frauds. Obviously if you have a proven history of fudging up revenue numbers, investors are less likely to invest in you. https://www.sec.gov/news/press-release/2020-190 https://www.sec.gov/news/press-release/2020-190
- guiriduro 3y ago
  If that were true, Carvana wouldn't have an obscene valuation.
  - woleium 3y ago
    …but it doesn’t?

by pavlov 3y ago

diggan 3y ago

> Bloomberg originally broke this story in 2018, then repeated the allegations in 2021. But AFAIK it was never proven. Isn't that libel? Or something similar at least, not super familiar with US laws.

pavlov 3y ago
My amateur understanding is that it’s very hard to successfully sue journalists for libel in the US because you’d have to prove malicious intent. A journalist writing a story based on their sources may have been misled by someone with an agenda, but didn’t write the false story with active malice.
- ghaff 3y ago
  As someone who has done journalism, that's basically correct. All indications are that simultaneously the story wasn't true and the reporter and all their editors firmly believed it was true. My personal assumption is that they believed the story was solidly sourced but they were misled. ADDED: Standards are somewhat different between private people and public people/corporations.
  - GauntletWizard 3y ago
    I'm glad the story ran, even if it wasn't true - because it opened people's minds to the idea that this was happening. And it is a very real possibility. O.MG is a hobbyist project, but there's no question that the NSAs dirty tricks book, ANT/TAO[1] has something similar, but far more capable. We should all be paying attention to hardware suppliers and making sure that objects are "as-ordered", but today even a standard chip packaging can hide a ton of malicious logic. [1]https://en.m.wikipedia.org/wiki/ANT_catalog https://en.m.wikipedia.org/wiki/ANT_catalog
    - WarOnPrivacy 3y ago
      > I'm glad the story ran, even if it wasn't true - because it opened people's minds to the idea that this was happening. By 2018, all the eyes that could be opened already were. It's true that there were people that aren't convinced by the well-evidenced reporting from the Snowden, etc revelations. Of that group, I can't see Bloomberg's low-evidence story as what finally opened their eyes.
    - mschuster91 3y ago
      > We should all be paying attention to hardware suppliers and making sure that objects are "as-ordered", but today even a standard chip packaging can hide a ton of malicious logic. For smartphones, laptops and PCs that is relatively easy to defend against if you think you might be a target for three-letter agencies - just walk into a computer store and buy what they have on the shelf with cash. Even the NSA doesn't have the resources to intercept and modify all the shipments to Apple, Best Buy, Costco and whatnot - and I'd guess at least Apple has pretty strict security in their supply chain given that Apple stuff has insane value even just for parts if someone were to intercept a delivery. Network architecture however, that is more complex. Cables, Ubiquiti, HP and Dell stuff, you can buy that off the shelf, so same advantage. But servers? Good luck finding ones on the shelf anywhere.
      - simne 3y ago
        > Even the NSA doesn't have the resources to intercept and modify all the shipments Your words are close to truth, but not equal to it. I don't know exact resources of NSA, but I know businesses in exUSSR, who done exactly what you say with smartphones and audio/video. This was grey scheme of import, with which imported more then 90% of tech in these countries, and this was reason, why Sony was condemned in Russia in 90s "for extremely low quality" (because local Sony representatives participated in scheme and central office closed eyes on this). So, in Eastern Europe that time existed zero import taxes for electronics. They imported electronics, disassembled it to parts, and exported to exUSSR as garbage; then these parts reassembled in garages and sold in ordinary shops as new devices. As I said, more then 90% reassembled, only less than 10% imported as ordinary contraband, or officially imported. For scale, as I remember, US have about 300mln population, Russia have 140mln, approx half (sure, Russians have much less purchasing power, but it is hard to estimate now, if may help, Russia GDP is very close to Italy with about 59mln population). > Apple has pretty strict security in their supply chain Must admit, Apple have better security than other manufacturers, but grey iPhones still sold in Russia, so real hackers found ways.
- kevin_thibedeau 3y ago
  The source in this case admitted that he presented a hypothetical scenario with a random SMD component as an example. The ignorant Bloomberg employee embroidered that into a lie.
  - underlipton 3y ago
    >Ignorant Never attribute to ignorance what can be explained by malice and corruption (post-GFC/Madoff, finance and its cottage industries no longer get the benefit of the doubt).
verticalscaler 3y ago
First we had too big to fail, now we have too stupid to fail.

1letterunixname 3y ago

Meta is wasting all kind of money ($40B across 2 years) on Nvidia, SMCI, and their own gear. SMCI and Nvidia stocks are now overvalued because there are no fundamentals to sustain this business. OpenAI/Microsoft may be an exception, but Meta is wasting money it doesn't have on profits that aren't there. These data centers and servers are being built on orders of Zuck without a concrete, specific product or purpose for their use. This is akin to a newbie business owner buying lots of inventory without orders.

fragmede 3y ago
you know the saying; the market can stay irrational longer than you can stay solvent and all that. turns out P/E ratios determine a theoretical floor for the price, but as we've seen with Tsla and crypto, this shits all vibes anyway. AI isn't slowing down, or going to go anywhere, so these stocks, overvalued though you might see them, aren't going to go down anytime soon, in my opinion, so while what your say is true, NVDA and smci are safe to hold. the real question is what's going on with tsmc and mu, given their proximity to NVDA, and their lack of a pop.
- solumunus 3y ago
  Currently TSM isn’t guiding much growth, I would guess we see an uptick in guidance in their next earnings report.
  - _zoltan_ 3y ago
    they report earnings monthly.
    - solumunus 3y ago
      They report some things monthly and they do a full earnings report quarterly.
- epolanski 3y ago
  It's interesting you mention Tesla, because their sales clearly show that the growth expectation was not realistic. And in case of Nvidia it's even much worse. In order for Nvidia to be worth a decent premium over the yield of some index fund like VOO (you're taking much more risk), it has to grow in the order of 42% per year for a decade in revenue. There's no such amounts of money to be spent in hardware, it's lunacy. Not even the other tech giants combined have even a small part of the money required for such growth. And on top of that, this is a very dynamic sector where any competitor, technological breakthrough can make you the new IBM. Prices like Nvidia were highly overvalued but understandable with a stretch of imagination of 25% growth for a decade when it was 300$. I could almost see it and would've still concluded it was an unlikely outcome and risk/reward ratio was not there. But now we long past that mark and in the territory of insane expectations and high premiums paid with a very high risk.

hello_computer 3y ago

I think most consumer market "reporting" is poorly-disguised market-manipulation. Best advice for your portfolio is to tune all of those assholes completely out.

underlipton 3y ago
Something fun: pay attention to how many financial news headlines are formatted, "X as Y" or "Statement Presented as Fact: Says Opinion-Haver". The first implies that there's some causational link between X and Y, when none might exist; the writer can claim that they were just stating that two events were happening in tandem. The second biases a reader before they receive the crucial information that the preceding statement was not, in fact, fact. (Also, lately, look out for listicles of stocks "to buy" (not financial advice, of course) and "Forget X".)

zettabomb 3y ago

That was such an incredibly ridiculous story. I spoke with more than a few supposed infosec "professionals" who believed it entirely too. Never mind that there were zero reports from other journals (you know, like anything even slightly technical), that none of the cited sources would reiterate what they had supposedly said, or that the claimed mode of operation wasn't even possible. Their follow-up, despite having been disproven numerous times over, was even more ridiculous.

toast0 3y ago
If I'm assuming everyone involved had good intentions, the best thing I can guess is someone was speaking to the writer about the potential of the BMC being used for spying and got some details mixed up. Consider: the BMC has access to the system via PCI-e, as well as kvm and comport. In some systems, the BMC is in the path of the main NIC. There have been some major software flaws in BMC software, including revisions that SuperMicro shipped, where passwords could be bypassed in the network interface. Stuff like this https://web.archive.org/web/20140625065505/http://blog.cari.net/carisirt-yet-another-bmc-vulnerability-and-some-added-extras/ https://web.archive.org/web/20140625065505/http://blog.cari.... and other things on this page http://fish2.com/ipmi/ http://fish2.com/ipmi/ are all pretty nasty if you thought IPMI was secure in the neighborhood of 2014.
- WarOnPrivacy 3y ago
  > If I'm assuming everyone involved had good intentions, the best thing I can guess is someone was speaking to the writer about the potential of the BMC being used for spying and got some details mixed up. I can't judge their intentions. But Bloomberg doubling down on the story in 2021 strongly discounts the possibility that the original reporting was based on any kind of bad info. ref: https://www.datacenterdynamics.com/en/news/years-later-bloomberg-doubles-down-disputed-supermicro-supply-chain-hack-story/ https://www.datacenterdynamics.com/en/news/years-later-bloom... Three years is a long time to believe in bad data, with everyone everywhere pointing out the same issues with their story.
  - 3y ago

darth_avocado 3y ago

The low valuation had less to do with the spying allegations and more to do with a history of accounting frauds. Obviously if you have a proven history of fudging up revenue numbers, investors are less likely to invest in you. https://www.sec.gov/news/press-release/2020-190 https://www.sec.gov/news/press-release/2020-190

guiriduro 3y ago
If that were true, Carvana wouldn't have an obscene valuation.
- woleium 3y ago
  …but it doesn’t?