2024-04-01 02:00:13 ET
Summary
- Super Micro Computer is the best-performing stock in the S&P 500, driven by the increasing demand for artificial intelligence.
- SMCI has a long runway, has shown a competitive edge in technology and time to market, and has taken market share.
- But the company's position in the data center value chain is less advantageous. SMCI also has struggling cash flow, low margins, and other internal issues.
- Additionally, the market's expectations are far too high for the stock in my view.
SMCI and the AI Tidal Wave
Super Micro Computer ( SMCI ) is currently the best-performing stock in the S&P 500, soaring 255% year-to-date and almost tripling the next best performer, NVIDIA ( NVDA ). As covered in my last article on Nvidia, both companies have seen a surge in revenues on the back of accelerating demand for artificial intelligence. Developments in generative AI applications, specifically Open AI’s Chat GPT, helped spur market affinity for businesses of the like.
The industry life cycle curve is a helpful way to visualize the modern emergence of AI. Let’s start by looking at the chart:
Read the full article on Seeking Alpha
For further details see:
The Bull And Bear Cases For Super Micro Computer