Super Micro Computer (SMCI) and NVIDIA are two popular AI stocks, with Supermicro being a leading producer of AI servers and NVIDIA being the largest producer of data center GPUs. Despite both stocks seeing significant increases in their stock prices, Supermicro is likely to outperform NVIDIA in the near future for several reasons.
Supermicro’s revenue and profit have experienced impressive growth rates, with analysts expecting further growth in fiscal 2024. On the other hand, while NVIDIA saw revenue stagnation in fiscal 2023, it experienced growth in fiscal 2024. However, analysts expect Supermicro to grow faster than NVIDIA over the next three years.
Supermicro also has a better-diversified business with greater growth potential, controlling only 10% of the AI dedicated server market with room for expansion. Its partnership with NVIDIA and development of servers using Advanced Micro Devices’ GPUs provides further growth opportunities. In comparison, NVIDIA’s market share and revenue generation are heavily reliant on its data center GPUs.
Moreover, Supermicro’s stock is relatively cheaper compared to NVIDIA, making it a more attractive investment for growth-oriented investors. Supermicro’s recent revaluation as a high-growth AI stock suggests it still has room for further growth. On the other hand, NVIDIA’s current valuation makes it appear expensive compared to other chip and AI stocks.
Despite Supermicro’s potential to outperform NVIDIA in the near future, both stocks are still considered excellent long-term bets in the AI market. Their different business models and focus areas within the AI market make them complementary investments for investors looking to capitalize on the growing AI industry.
Article Source
https://www.fool.com/investing/2024/06/23/3-reasons-super-micro-computer-could-outperform-nv/
