In the early trading of October 30, the share price of Super Micro (SMCI) plummeted by more than 24%. The decline was directly related to the news of the resignation of its accounting firm Ernst & Young.

Ernst & Young decided to resign as an accountant due to disagreements with Super Micro on governance structure and board independence, and expressed distrust in the company's financial statements. In his resignation letter, Ernst & Young mentioned that he could not support the financial statements prepared by management, which further caused market anxiety and caused the share price to fall by 35% after the news was announced.

The main reason for Ernst & Young's resignation was the lack of transparency in Super Micro's governance and financial control issues. According to reports, Ernst & Young has raised serious concerns about Super Micro's internal control and governance since late July 2024, and asked the company to set up a special board committee to investigate.

The resignation letter clearly pointed out that the recent investigation results showed that the statements of the company's management and audit committee lacked credibility, which in turn reduced the market's trust in its financial statements. This situation undoubtedly poses a double challenge to Super Micro's finances and reputation.

Although AMD has achieved impressive financial performance in recent years, especially in the fields of server business, artificial intelligence (AI) algorithms and data storage, and has become one of the components of the S&P 500 index, the company has also been investigated by regulators for financial transparency issues.

In 2020, AMD was fined $17.5 million by the U.S. Securities and Exchange Commission (SEC) for improper revenue recognition, when the company was accused of recording revenue in advance and improperly. The resignation of the accountant has once again deepened the outside world's doubts about the company's internal control.

After Ernst & Young resigned, investors doubted the reliability of AMD's financial data, causing the company's stock to fall sharply and perform significantly behind the market. Although AMD has hired Cooley Law Firm and Forensic Accounting Firm to conduct an internal control review, it remains to be seen whether this move can effectively alleviate investors' concerns.

Ernst & Young's resignation letter and its doubts about governance undoubtedly pose a challenge to AMD's long-term growth prospects, and the market's requirements for its governance structure and board independence have increased accordingly.

While AMD's stock price plummeted, the stock prices of competitors Dell (DELL) and Hewlett Packard Enterprise (HPE) rose 6.4% and 2.4% respectively, indicating that the market generally believes that these companies can quickly fill the market gap in the field of AI servers.

Dell and HP already have a strong position in the server business, and this incident has created favorable conditions for them to expand their market share in AI servers. Nvidia (NVDA), an important partner of AMD, fell slightly by 1.4%, indicating that investors are still evaluating the potential impact of this incident on its supply chain.