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What You Need To Know Ahead Of Super Micro Computer's Earnings Report
Key TakeawaysSuper Micro Computer (SMCI) is set to report fourth-quarter earnings for its fiscal 2024 after the bell Tuesday, with investors likely watching for strong quarterly guidance that suggests strong artificial intelligence (AI) demand as well as awaiting updates on the server maker's partnership with Nvidia (NVDA).
The company's revenue is projected to be $5.29 billion, according to estimates compiled by Visible Alpha. Net income is expected to come in at nearly $489 million, or $7.54 per share, positioning revenue and profit higher than both Super Micro's prior quarter and the year-ago period.
Analyst Estimates for Q4 2024 Q3 2024 Q4 2023 Revenue $5.29 billion $3.85 billion $2.18 billion Diluted Earning Per Share $7.54 $6.56 $3.43 Net Income $488.98 million $402.46 million $193.6 million Key Metrics: Guidance Reflecting AI Demand Investors will likely be watching for the server maker to issue sales guidance for the current first quarter that indicates strong demand for its AI technology at the start of its fiscal 2025 year. Analysts expect Super Micro to guide toward $5.37 billion in first-quarter sales, while full-year guidance is projected to be $23.83 billion, according to estimates compiled by Visible Alpha. J.P. Morgan analysts said they expect Super Micro to report better-than-consensus guidance for the first quarter of its fiscal 2025, "to assure investors around AI-led demand." They expect the full-year outlook to be in line with consensus, however, as Super Micro likely "chooses to remain conservative till it gets further visibility." Business Spotlight: Nvidia Partnership Update Amid Reports of Delay Super Micro Computer is an Nvidia partner, and makes AI-based servers for the chip maker. The company could give investors some reassurance when it reports Tuesday that demand for its AI servers remains strong, especially as Nvidia's launch of Blackwell, its next-generation chips, has reportedly been delayed. Super Micro shares were down 3% at $605.14 Monday afternoon, paring steep earlier losses above 10%. The stock has more than doubled year-to-date, although it is off peaks hit in March. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.Super Micro Computer Corporate Site. "Fiscal 4Q 2024 Results."
Super Micro Computer. "Q3 2024 Report."
Super Micro Computer. "Q4 2023 Report."
J.P. Morgan. "Super Micro
F4Q24 Preview: Revenue Guide to Address AI Demand Concerns, But Margins Might Remain Debated."
The Information. "Nvidia's New AI Chip is Delayed, Impacting Microsoft, Google, Meta."
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Why Palantir Technologies, Super Micro Computer, And Other Artificial Intelligence (AI) Stocks Stumbled Today
Artificial intelligence (AI) has been all the rage since early last year, helping to ignite and sustain an ongoing market rally. Generative AI has shown the potential to streamline time-consuming tasks, which will increase productivity and boost profits for companies that adopt this groundbreaking technology.
Nvidia (NASDAQ: NVDA) is widely regarded as the flag-bearer for AI, so when Nvidia sneezes, other AI stocks catch a cold. Furthermore, a rate hike in Japan had unintended consequences for global markets.
With that as a backdrop, several of the world's most renowned AI companies suffered setbacks today. Palantir Technologies (NYSE: PLTR) tumbled 2.7%, Super Micro Computer (NASDAQ: SMCI) slumped 1.8%, and Broadcom (NASDAQ: AVGO) slipped 1.7% as of 3:41 p.M. ET.
Let's see what set those declines in motion -- and what it means for the future.
Image source: Getty Images.
A stunning one-two punchWord broke over the weekend that Nvidia had discovered a design flaw in its next-generation Blackwell AI processor, which could set back the release date by three months, according to a report in The Information.
Nvidia's graphics processing units have been widely acknowledged as the gold standard when it comes to training and running AI systems. Demand has been unquenchable as companies scramble to unleash AI and capture their part of the expected windfall.
Furthermore, Nvidia's Blackwell processor is a major component of the company's GB200 Grace Blackwell Superchip, which reportedly offers a 30 times performance increase for inference and four times for training compared to its predecessor, while reducing energy consumption by 25 times. This stunning increase in performance had customers lining up to buy these next-generation chips, so the resulting delay could cost billions.
In an unrelated development, the Bank of Japan announced an interest rate hike in a bid to tame inflation, increasing its benchmark rate from 0.10% to 0.25%. Unfortunately, the move had unintended consequences.
Investors had been taking advantage of Japan's historically low interest rates to underpin a carry trade. This involved borrowing the Japanese yen and using the funds to invest in the stock market -- in this case, many AI-related stocks.
However, the rate hike boosted the value of the yen, making it more expensive to buy. This in turn sent traders scrambling to unwind these trades and replace the borrowed yen. This sparked a stock market sell-off that spread around the globe like wildfire.
But what does this mean for AI investors?So, what does this mean for investors in Palantir Technologies, Super Micro Computer, and Broadcom? In a word: nothing.
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To be clear, it's unnerving to see the stocks you own slump on no company-specific news. The good news is that the initial global panic that helped take down our trio of stocks by double-digit percentages is already beginning to subside as clearer heads prevail.
AI remains a once-in-a-generation opportunity. Estimates vary, but generative AI could have a market value of between $2.6 trillion and $4.4 trillion annually, according to global management consulting firm McKinsey & Company.
Furthermore, investors should consider our trio of stocks in light of each one's AI potential:
Palantir has developed boot camp sessions that companies can attend to create AI solutions for real-world problems -- and demand has been off the charts.
Super Micro Computer provides the cutting-edge servers that businesses need to deploy AI, and the company has been expanding its production facilities to keep up with soaring demand.
Demand for AI-related products has also been a boon to Broadcom, driving robust growth.
After generating big gains over the past year, our trio of stocks has seen a resulting increase in their valuations. Palantir, Broadcom, and Super Micro are currently selling for 72 times, 30 times, and 18 times forward earnings, so Super Micro is already relatively cheap.
However, this doesn't take into account the expected growth trajectory resulting from strong demand for AI. When measured using the more appropriate forward price/earnings-to-growth (PEG) ratio, each sports a multiple of less than 1, the standard for an undervalued stock.
That helps explain why Palantir, Super Micro Computer, and Broadcom represent compelling opportunities for savvy long-term investors.
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Danny Vena has positions in Nvidia, Palantir Technologies, and Super Micro Computer. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Why Palantir Technologies, Super Micro Computer, and Other Artificial Intelligence (AI) Stocks Stumbled Today was originally published by The Motley Fool
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