Despite surpassing quarterly earnings forecasts, both AMD (AMD) and Super Micro Computer’s (SMCI) stocks witnessed a significant drop in trading post-announcement. Such corrections, akin to a necessary brake check on a speeding sports car, may actually serve to stabilize the market. Notably, Super Micro shares have seen a meteoric rise, akin to a rocket blasting off into the stratosphere, climbing an astonishing +451% over the past year, while AMD has held strong with a respectable +79% increase.
Reactions to Earnings Performance
Was the market’s reaction an overblown knee-jerk response, or is it potentially an opportune moment for investors to seize the post-earnings hiccup in these AI titans? Super Micro’s stock, demonstrating resilience after the fall, surged by +3% on Thursday, with AMD also showing a modest increase at +1%.
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Analyzing Performance
Nvidia’s (NVDA) stellar growth trajectory, fueled by soaring demand for AI chips, may have set a high bar for AMD’s Q1 report. Despite this, AMD posted earnings of $0.62 per share, edging out expectations of $0.60 a share—a flat performance from the comparative quarter. Quarterly sales of $5.47 billion also exceeded estimates by 1% and marked a 2% increase from $5.35 billion in Q1 2023.
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Contrastingly, Super Micro, a provider of optimized server solutions, faced lofty expectations following its stock’s dizzying ascent, mirroring that of Nvidia. Its substantial hype and growth as an original equipment manufacturer of AI-compatible servers have been notable. Despite beating expectations with earnings of $6.65 per share for the fiscal third quarter, a 15% outperformance, Q3 sales of $3.85 billion marginally missed estimates by -3%, signaling a 200% surge from $1.28 billion a year prior.
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Growth Trajectories Unveiled
Zacks estimates project a 30% annual earnings upsurge for AMD in fiscal 2024, with expectations of a further 47% leap in FY25 to $5.06 per share. Sales are anticipated to climb by 11% this year and by a substantial 23% in FY25, reaching $30.97 billion.
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Conversely, Super Micro’s annual earnings are anticipated to skyrocket by 85% in FY24 to $21.88 per share from $11.81 a share in 2023. Projections for fiscal 2025 show a further 35% increase to $29.51. Sales for Super Micro are expected to surge by 103% in FY24 and are forecasted to soar an additional 35% in the following year, reaching $19.5 billion.
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Key Takeaway
While the market reaction post-earnings may not have been unwarranted, the growth prospects for both AMD and Super Micro remain enticing. AMD boasts a Zacks Rank #2 (Buy), signaling promise, whereas Super Micro holds a Zacks Rank #3 (Hold) post a tremendous run-up in its stock price.
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