For tech stock Super Micro Computer (NASDAQ:SMCI), the recent earnings report it released did it a world of good, sending shares up over 26% at the time of writing. Interestingly enough, the earnings report objectively wasn’t that great, but the guidance that accompanied it was what gave investors the impetus to buy in.
Super Micro posted a fairly solid earnings per share figure of $1.63. That was actually a miss, though, as analysts expected $1.71. Revenue came in at an impressive $1.28 billion, but even that was down 5.9% against the same time last year. But it’s the guidance that’s the real attention-getter here, starting with net sales approaching double what they were this time. Net sales are now expected between $1.7 billion and $1.9 billion, a long way above the $1.64 billion that analysts had in mind.
Meanwhile, earnings for this quarter are expected to be between $2.21 and $2.71 per share. That blows the $1.76 per share analysts expected out of the water, and Super Micro also kept its full-year figures where originally indicated. What’s going to put so much extra fire in the earnings? Artificial intelligence. Super Micro’s expanded earnings are based on the expectation there will be much greater demand for hardware that can handle artificial intelligence. Generative AI like ChatGPT, among others, requires plenty of processing power, and that means a lot more interest in stocks like Super Micro.
There are critics of Super Micro Computer, however, who don’t expect great results. Hedge funds, for example, currently stand at Very Negative in their confidence in the stock. Moreover, hedge funds sold 314,700 shares of Super Micro Computer stock in the last quarter, continuing a sell-off that has lasted for the last four quarters so far and nearly completely selling out.
