10 Worst Augmented Reality (AR) Stocks According to Short Sellers

6. Super Micro Computer, Inc. (NASDAQ:SMCI)

Number of Hedge Fund Holders: 47

Short Interest: 13.1%

Super Micro Computer, Inc. (NASDAQ:SMCI) is another information technology company on our list and is based in San Jose, California. The company’s product offerings include edge-to-cloud technologies for AR, computer vision, multi-access edge computing, and more. It is also working with Taqtile to provide an interactive demonstration of AR for robotics and on-site training.

One of the major reasons why investors should avoid this stock is that its capital expenditures have been on the rise since the end of 2023, while its gross profit margin has been plateauing. For instance, in 2024, Super Micro Computer, Inc. (NASDAQ:SMCI) hit the $92 million mark on its quarterly capital expenditures, while its gross profit margin actually fell from over 18% in 2023 to about 15.5% in 2024.

Super Micro Computer, Inc. (NASDAQ:SMCI) is also considered overvalued relative to its competitors. The stock has a P/E ratio of 27.3, while competitors Dell and HP, which are arguably more diversified, have P/E ratios of 22.8 and 12.02, respectively. Because of this, investors looking to buy into businesses similar to Super Micro Computer, Inc. (NASDAQ:SMCI) prefer the cheaper options that are also better poised to continue on a growth trajectory in the near future.

There were 47 hedge funds long Super Micro Computer, Inc. (NASDAQ:SMCI) in the second quarter, with a total stake value of $1.5 billion. Citadel Investment Group was the most prominent shareholder, holding 17,515,000 shares.

Artisan Partners said the following about Super Micro Computer, Inc. (NASDAQ:SMCI) in its second-quarter 2024 investor letter:

“Super Micro Computer, Inc. (NASDAQ:SMCI) manufactures server racks for central processing units and GPUs that have experienced an artificial intelligence-driven uptick in demand from its cloud and enterprise customers. This company has been on our radar for years, and we met with them in our Milwaukee offices in early 2023. However, we don’t consider the stock investable given corporate governance issues.”