In This Article:
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Both Super Micro Computer and Intel have faced challenges in recent times, and that’s weighed on their stock prices.
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These companies could benefit from the future stages of AI growth as this opportunity is far from over.
Artificial intelligence (AI) stocks have soared over the past two years, gaining in the double and even triple digits. Names like chip designer Nvidia and software player Palantir Technologies led the movement as they reported soaring demand for their offerings, and this equaled top earnings and stock price performance.
Though AI has been a growth driver for many tech players, certain companies have either lost momentum in more recent times or missed out on the initial stages of the AI boom. This doesn't mean they won't benefit from the AI growth story moving forward, though, as the market is expected to surpass the trillion-dollar mark by 2030. So, there's still time for companies to score an AI win.
With this in mind, let's consider Super Micro Computer (NASDAQ: SMCI), a company that once soared but hit a roadblock last year, and Intel (NASDAQ: INTC), a player that's lagged rivals in the AI space. Which is the better AI stock? Let's find out.
Supermicro has been around for more than 30 years, but the company's growth truly took off in the early days of the AI boom. The tech player provides servers and full rack scale systems to data centers. Importantly, it includes the latest technologies -- for example, chips from AI leaders such as Nvidia or Advanced Micro Devices (AMD) -- in its systems. This helped revenue and stock performance climb.
But questions into the company's accounting practices then weighed heavily on share performance, and the stock fell more than 70% from its high in March of last year through the end of the year.
The accounting questions were resolved, though, putting the company back on track. But investors have been wary about piling into this stock in recent times. Concern about the economy ahead has hurt AI stocks in general, and investors also have been disappointed in Supermicro's shrinking gross margin -- it came in at less than 10% in the recent quarter versus 15% a year earlier. This isn't too alarming, though, as it's linked to higher inventory of older products and expenses to bring newer products to market.
It's also important to note that Supermicro benefits from a building-blocks technology that allows it to quickly assemble and deliver its equipment, tailored to a customer's needs. And the company's expertise in liquid-cooling technology could offer another growth driver as customers look for ways to address the challenge of heat buildup in AI data centers.