The 23% collapse of Super Micro Computer Inc. (NASDAQ: SMCI) stock in one day was blamed on a flight from AI stocks. Even mighty Nvidia Corp. (NASDAQ: NVDA) dropped 10% simultaneously. One of the primary reasons for the drop is that Super Micro Computer did not release preliminary earnings as it has in the past. However, that may not mean anything. The upcoming official earnings release results may be fine. If so, the stock sold off for very little reason. Even if that is true, the sell-off was brutal.
Super Micro, as it is nicknamed, makes servers that run AI chips. The feeding frenzy of the valuation of AI-driven companies has pushed valuations of both public and private companies up as much as 3x since late last year. Nvidia’s tremendous earnings have been one reason. Microsoft Corp.’s (NASDAQ: MSFT) investment in OpenAI is another. It valued the private company at $80 billion.
Super Micro released preliminary earnings 11 days before the official announcement in January. For the current quarter, investors must wait until the official date on April 30, when it announces its fiscal third quarter numbers. In fiscal Q2, its revenue rose 103% over the same quarter the year before to $3.7 billion. Presumably, an increase of less than 100% year over year when it releases FY Q3 will be a disappointment. It forecasts that revenue will be between $3.7 billion and $4.1 billion.
It is not unusual for companies to change how they release numbers. Among them is Netflix’s new decision to release less detailed figures for subscriber growth. Each company has its reason for making these alterations. The Super Micro decision may mean nothing.
Super Micro’s stock is still up 151% this year. Last year, it rose 246%. Is the stock too expensive? One answer will come out on April 30. Based on expectations, the numbers could be OK.
See which two AI stocks Wall Street expects to return up to 809% in 2024.
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