Updated: Super Micro Computer stock rises as optimistic earnings forecast indicates strong demand for artificial intelligence
Update stock prices at market open
Reuters, October 21 - Super Micro Computer (SMCI.O) shares surged more than 11% on Wednesday, after the company projected quarterly revenue (link) and profit margins would far surpass Wall Street expectations, indicating continued strong demand for artificial intelligence data centers.
The AI server manufacturer's stock rose by 11.6% to $36.25, setting a new one-week high.
Details as follows:
According to data compiled by London Stock Exchange Group (LSEG), Super Micro Computer expects first-quarter revenue to be between $18.5 billion and $19.5 billion, surpassing analysts' expectations of $15.23 billion
The company now expects profit margins to be between 12% and 12.5%, compared to its prior guidance of 10.4% to 10.8%
The current boom in data center construction has largely benefited semiconductor and AI server manufacturers, including Super Micro Computer
Spending by Microsoft, Google, Amazon, and Meta on AI infrastructure is expected to exceed $700 billion this year
Other server makers Dell (DELL.N) and Hewlett Packard Enterprise (HPE.N) also saw their shares rise by 5.1% and 3.2% respectively
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UBS Global Wealth Management strategists said: "Investors may focus on whether the strong performance of core businesses can continue to support high levels of AI investment."
The firm added that the market will closely scrutinize comments from AI giants regarding spending, profit margins, and returns to determine if the AI capital expenditure cycle is justified
Recently, there has been market concern about the profitability of data center operators, who are raising funds for expansion projects through bond issuance while borrowing costs are rising
Heavily indebted data center operator CoreWeave (CRWV.O) became the focal point of a sell-off last week (link), and the sell-off also affected stocks related to artificial intelligence
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