In March, Super microcomputer was added to the S&P 500 after an epic rise that boosted the stock by more than 2,000% in two years, eclipsing it Nvidia's Profits.

As it turned out, S&P had reached the top.

Less than two weeks after the index changes were announced, Super Micro hit its closing high of $118.81 and had a market cap of nearly $70 billion. Since then, the stock has fallen 72%, pushing its valuation to under $20 billion. This is the first big sign in public markets that the hype surrounding artificial intelligence may not all be justified.

Super Micro is one of the main providers for building Nvidia-based server clusters for training and deploying AI models.

The stock plunged 33% on Wednesday after the company announced that its auditor Ernst & Young had resigned, saying it was “unwilling to be associated with the financial reports prepared by management.” As of 10 a.m. ET on Thursday, the price fell another 16%.

Super Micro is now at risk of delisting from Nasdaq and has until November 16 to regain exchange compliance.

“We see higher delisting risk in the absence of an auditor and the potential challenge of getting a new one,” Mizuho analysts, who have a “hold” rating on the stock, wrote in a report on Wednesday.

Ernst & Young was new to the position, having just replaced Deloitte & Touche as Super Micro's accounting firm in March 2023.

A spokesperson for Super Micro told CNBC in a statement that the company “disagrees with E&Y's decision to resign and we are working diligently to select new auditors.”

Representatives for Ernst & Young and Deloitte did not respond to requests for comment.

For much of Super Micro's three decades in business, the company existed well under the radar, operating as a relatively unknown Silicon Valley data center company.

That changed in late 2022, after OpenAI's launch of ChatGPT sparked a historic wave of investment in AI processors, largely supplied by Nvidia. Together with DellSuper Micro was one of the big winners of the Nvidia boom and packed the powerful graphics processors (GPUs) into tailor-made servers.

Super Micro's revenue has at least doubled in each of the previous three quarters, even though the company hasn't filed official financial disclosures with the SEC since May.

Wall Street sentiment toward the company has changed dramatically.

Since S&P's index changes announced in March, Super Micro's stock has fallen at least 10% six times. The most worrisome drop before Wednesday occurred on August 28, when shares fell 19% after Super Micro said it would not file its annual report with the SEC on time.

“SMCI’s management requires additional time to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024,” the company said.

Prominent short seller Hindenburg Research then disclosed a short position in the company and said in a report that it had found “new evidence of accounting manipulation.”

The following month, Super Micro said it had received a notice from Nasdaq indicating that the delay in filing its annual report suggested the company had failed to comply with the exchange's listing rules. Super Micro said Nasdaq's rules gave the company 60 days to file its report or submit a plan to restore compliance. Based on this time frame, the deadline would be mid-November.

It wouldn't be the first for Super Micro. The company was delisted from Nasdaq back in 2018.

Wedbush analysts see reason for concern.

“Given that SMCI missed the deadline to file its 10K application and the clock is ticking for SMCI to resolve this issue, we view this development as a significant obstacle to SMCI's path to filing on time to avoid delisting,” it said Analysts recommend holding the stock, a report said.

With Super Micro's stock in the midst of its biggest selloff since 2018 on Wednesday, the company issued a press release on Tuesday, November 5, announcing that it would “provide a business update for the first quarter of fiscal 2025.” ” become.

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Super Micro's spokesman told CNBC that the company does not expect the matters raised by Ernst & Young “to result in a restatement of its quarterly financial results for the fiscal year ended June 30, 2004 or for any prior fiscal years.”

Beyond Super Micro, the unfolding incident is a potential black eye for S&P Dow Jones. Since then replaced Super Micro Jacuzzi In the S&P 500, the home appliance maker's shares fell about 3%, underperforming the overall market, but holding up significantly better than the stock that took its place.

Inclusion in the S&P 500 often causes a stock to rise because money managers who track the index must buy shares to reflect the changes. This means that pension and pension funds have a greater stake in the index members. Super Micro shot up 19% on March 4, the first day of trading after the announcement.

An S&P Global spokesman said the company does not comment on individual constituents or index changes, citing its methodology document for general rules. The main requirements for inclusion are positive GAAP earnings over the last four quarters and a market capitalization of at least $18 billion.

S&P may make unscheduled changes to its indices at any time “in response to corporate actions and market developments.”

Kevin Barry, chief investment officer at Cantata Wealth, says that inclusion in such a closely followed index should take greater account of a stock's volatility, especially given that technology already accounts for about 30% of its weighting.

“The likelihood of a stock going up 10 or 20 times in a year or two and then having indigestion is extremely high,” said Barry, who co-founded Cantata this year. “You are moving from a low volatility stock to a higher volatility stock, while the technology sector is already by far the largest sector in the index.”

— CNBC's Rohan Goswami and Kif Leswing contributed to this report.