1. Super Micro Computer Inc. (NASDAQ:SMCI)
Short % of Float As of September 13: 19.52%
Market Capitalization as of September 30: $24.58 billion
Number of Hedge Fund Holders: 47
Super Micro Computer Inc. (NASDAQ:SMCI) is a leading provider of high-performance computing and storage solutions that designs and manufactures a range of server systems, workstations, and storage products, catering to various industries including cloud computing, data centers, and enterprise applications. It is known for its innovative technology, energy efficiency, and customization capabilities.
The company operates in over 100 countries and has experienced significant growth in recent years, driven by its expansion in Asia and focus on value-added AI solutions. Its innovative products, including liquid cooling clusters and next-generation X14 and H14 systems, have been crucial in supporting the growth of AI. The company’s revenue and profitability have significantly increased over the past three years, largely driven by the rising demand for AI solutions.
It grew its revenue by 142.95% in FQ4 2024 as compared to the year-ago period, amounting to a total revenue of $5.31 billion. The revenue for the fiscal year 2024 reached $14.94 billion, a remarkable 110% increase year-over-year. The earnings per share for the fourth fiscal quarter were $6.25, missing Street estimates by $1.89. Management has speeded up its production and is now producing 5,000 racks and over 2,000 direct liquid cooling racks per month.
It recently introduced new servers powered by Intel’s Xeon processors. These servers feature advanced architectures, including 10U and multi-node form factors, to support next-generation GPUs and higher CPU core densities. The servers also offer improved memory configurations and liquid cooling solutions, enabling the company to provide customized solutions for its customers.
Despite recent challenges, the company remains a promising investment opportunity. Its strong fundamentals, innovative solutions, and growth potential in the AI server market position it for long-term success.
Carillon Scout Mid Cap Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its Q2 2024 investor letter:
“Super Micro Computer, Inc. (NASDAQ:SMCI) was the top detractor to returns in the second quarter. Super Micro designs and manufacturers server solutions based on modular and open-standard architecture. This modular approach combined with a strong engineering culture helps the company to supply the market with advanced servers and rack-scale compute solutions quickly. After an impressive return in the first quarter, the company offered disappointing near-term earnings guidance, though we do not believe its long-term opportunity has diminished. We expect continued strong growth for several years, although the range of outcomes is quite wide; it is difficult to forecast AI server market growth with precision.”
While we acknowledge the growth potential of Super Micro Computer Inc. (NASDAQ:SMCI), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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