Which company is the focus this week? It’s Nvidia (NASDAQ: NVDA), hands down. The chipmaker will announce its second-quarter earnings results following the market close on Wednesday.
I fully expect Nvidia’s numbers to please investors again, enabling it to extend its already impressive gains this 12 months. But there’s one other stock-split stock that may also soar if Nvidia delivers a blowout Q2 update.
Joined on the hip
Super Micro Computer (NASDAQ: SMCI), also called Supermicro, is arguably joined on the hip with Nvidia. The company provides server and storage solutions which could be especially popular in data centers.
The equivalent artificial intelligence (AI) tailwind fueling Nvidia’s growth also helps Supermicro. Charles Liang, Supermicro’s president and CEO, said earlier this month that his company “continues to experience record demand of latest AI infrastructures.” In consequence, Supermicro’s revenue throughout the fourth quarter of its fiscal 2024 soared 110% 12 months over 12 months.
If Nvidia handily beats expectations with its Q2 results on Wednesday (and, more importantly, if the company’s guidance is powerful), it’ll bode well for Supermicro’s fortunes over the near term. I seek for Nvidia to also provide some clarity on the timing of when chips based on its recent Blackwell architecture will begin shipping. This must also help Supermicro, which has liquid-cooled AI superclusters in a position to support Blackwell.
Sure, Liang maintains that a delay for Blackwell won’t impact Supermicro much because it does business with other chipmakers. Make no mistake about it, though: Good news from Nvidia will translate to good news for Supermicro.
Will Supermicro’s stock split provide one other catalyst?
I don’t think there’s much doubt that a blow-out Nvidia Q2 update would offer a catalyst for Supermicro. But what with regard to the corporate’s 10-for-1 stock split scheduled for Oct. 1? It’s iffy, personally.
For one thing, Supermicro’s stock split won’t change anything the least bit with regard to the corporate’s underlying business or its growth prospects. Alternatively, spectacular guidance from Nvidia would likely mean stronger growth ahead for Supermicro.
Any investor who really desired to purchase shares of Supermicro could accomplish that even with its share price trading throughout the ballpark of $600. Many online brokerages support buying fractional shares.
Nonetheless, this may likely be Supermicro’s first stock split. I’ll admit that it’s possible some investors who’ve remained on the sidelines could view the split as a tremendous opportunity to buy the stock. I feel the allure to take a position in Supermicro could possibly be even greater if the stock indeed soars as I expect it’ll following Nvidia’s quarterly update this week.
Is Supermicro a greater stock to buy than Nvidia?
Now for a superb more essential query: Is Supermicro a greater stock to buy than Nvidia? Wall Street seems to think so.
The consensus 12-month price goal for Supermicro of analysts surveyed by LSEG in August reflects an upside potential of over 50%. By comparison, the common price goal for Nvidia is barely lower than its current price.
I agree that Supermicro is a greater pick than Nvidia. My primary reasoning is valuation. Supermicro’s shares trade at a much lower forward earnings multiple than Nvidia’s. But when Nvidia gives great news to investors on Wednesday, each of those stocks have to be big winners.
Do you might have to take a position $1,000 in Super Micro Computer without delay?
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Keith Speights has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Nvidia. The Motley Idiot has a disclosure policy.
This Stock-Split Stock Could Soar If Nvidia Delivers a Blowout Q2 Update was originally published by The Motley Idiot