Super microcomputer (NASDAQ:SMCI) The shares are posting big gains in Thursday’s trading. The company’s stock price was up 15.4% as of 1:15 p.m. ET.
Super micro stocks are gaining ground on the heels of Nvidia‘s recently published third-quarter results. Supermicro is one of Nvidia’s largest customers, and the artificial intelligence (AI) leader’s third-quarter results, commentary and outlook send bullish signals for other AI stocks.
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Nvidia released its third-quarter results after the market closed yesterday, reporting revenue and profit for the period that exceeded Wall Street expectations. The company reported non-GAAP (adjusted) earnings per share of $0.81 on revenue of $35.08 billion, beating the average analyst estimate for earnings per share of $0.75 on revenue of $33.16 billion exceeded.
The company also said it expected fourth-quarter revenue of about $37.5 billion, beating the average analyst forecast for revenue of $37.08 billion in the period. After posting 94% year-over-year revenue growth in the third quarter, the company’s fourth-quarter guidance suggests annual revenue growth of about 70%.
Nvidia’s strong performance and outlook indicate a favorable demand backdrop for Supermicro. And while some reports suggest the GPU leader has diverted orders from Supermicro in favor of other customers, Nvidia CEO Jensen Huang called the server specialist one of his company’s “great partners” during his conference call.
Nvidia’s third quarter report and commentary suggest that spending on AI infrastructure remains quite high and will remain so in the near term. The company’s GPUs are the core components of Supermicro’s powerful AI servers, and its sales performance and future guidance provide reliable indicators of the kind of demand background the server specialist faces.
On the other hand, there are still questions surrounding Supermicro that cloud the prospects for its stock. The company recently avoided having its shares delisted from the Nasdaq stock exchange by filing a filing plan to regain compliance with the Securities and Exchange Commission (SEC).
Ernst & Young resigned as Supermicro’s financial auditor in October over concerns about the reliability of information from the company’s management and audit committee. BDO has now come on board as the tech specialist’s auditor. Now that BDO has been hired, the company should be able to move forward with filing its annual 10-K report for the latest fiscal year. But there is still a risk that the stock could be delisted from the Nasdaq – or that previously reported financial results could see significant downward revisions.
