Hindenburg Research takes aim at AI companies, sinks two company’s shares
Hindenburg Research aims at AI Bubble
Hindenburg Research, an activist short-selling firm known for its market-making takedowns of top companies such as Block and the Adani Group, published two reports last week on companies it sees as unfairly profiting from the AI boom. Share prices of server and storage maker Super Micro and software company iLearningEngines both fell sharply.
The report comes amid growing hype from companies ranging from hyperscaler giants like Microsoft and Google to hardware firms and even utilities that could benefit from the demand. Last week, GPU maker Nvidia announced better-than-expected performance, but its stock price still fell, reflecting growing wariness about the industry, especially among institutional investors.
Hindenburg's two reports are an even stronger indication of bubble fears. The short-selling firm targets companies or sectors that they believe are overvalued. Hindenburg often takes a short position on a company that thinks it will collapse before it publishes its findings, hoping to reap a handsome return from a falling stock price.
Accounting fraud
Hindenburg's first report on Tuesday focused on Super Micro, a maker of hardware such as servers and motherboards that is important to AI companies. Super Micro's market cap was about $35 billion before Hindenburg's research. The day after the report, it fell 26 percent and remains at about $26 billion.
Hindenburg's report on iLearningEngines on Thursday proved even more damning. Like Super Micro, Hindenburg described iLearningEngines as a company looking to capitalize on the AI wave, although short sellers doubted the company had ever focused on the emerging field before the hoax.
iLearningEngines went public via SPAC in April 2024, although its stock price was around $3 before the report, which dropped below $1.50 after Hindenburg's investigation with a market cap of around $175 million.
