Opinion: With AMD and Super Micro disappointing, Nvidia is the chip industry’s only hope.

With AMD  After two other highly anticipated AI-related businesses, Advanced Micro Devices and Super Micro Computer, disappointed investors on Tuesday, investors would do well to hope that Nvidia Corp. outperforms Wall Street’s current expectations.

Super Micro SMCI, -3.54% and AMD AMD, -1.14% both reported highly anticipated earnings on Tuesday that had some disappointing elements. Thanks to their present and upcoming product offerings, both businesses have become highly traded stocks in the AI space. This comes on the wake of Nvidia’s NVDA, -1.54% recent tremendous success.

Nvidia dragged to worst day since March 2020 after Super Micro plunge : r/NVDA_Stock

However, they were the driving force behind Tuesday’s after-hours slide in semiconductor stocks. Excessive expectations surrounding AI can be detrimental to this industry, as seen by Super Micro’s roughly 10% share price decline and AMD’s 6% share price loss. After hours, a number of other semi-stocks also dropped, with the Almost 2% was lost by the Philadelphia Semiconductor Index SOX following the conclusion of regular trading.

In AMD’s case, the company increased its revenue projection from $3.5 billion to around $4 billion this year from its new AI accelerator-chip family, known as the M1300. The MI300 has become “the fastest ramping product in AMD history, passing $1 billion in total sales in less than two quarters,” according to AMD Chief Executive Lisa Su.

However, projections of AMD’s potential in 2024 have been thrown around by analysts and investors, ranging from $5 billion to $6 billion, so investors were taken aback by Su’s forecast of $4 billion or more.

In a letter to clients on Tuesday, Third Bridge analyst Lucas Key stated, “Our experts have given us a ceiling of $5 billion AMD’s GPU revenue opportunity for 2024.” This estimate was based on his semi-industry interviews.

Super Micro, on the other hand, revealed fiscal third-quarter revenue of $3.85 billion, up 200% but still falling short of FactSet’s projected revenue of $3.95 billion. The company stated that it could not fulfill all of the demand for its products due to component limits, but it is still witnessing a high demand for its servers, which are made to take advantage of AI-compute needs.

Why Super Micro's stock is having a day for the history books - MarketWatch

Super Micro did not say which parts are limited, however it is most likely referring to the GPUs made by Nvidia. Nvidia stated in the most recent quarter that it anticipated this year’s demand for its GPU AI accelerators to surpass supply.

May 22 is when Nvidia will release its earnings report. That is a long period of time for investors to become overly optimistic. This year, Super Micro has increased by 202%, and Nvidia has increased by 74%. AMD is presently only up roughly 7.4% year to far, having progressively declined from a top of nearly $227 since mid-March. Investors should keep in mind that these stocks are extremely volatile and can alter drastically at any time.

Article Source MarketWatch

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