Super Micro Computer: AI Boom Fuels Growth Amid Challenges

Prediction: Here's Where Super Micro Computer Is Headed in 2025 | The Motley Fool

Super Micro Computer (SMCI -0.77%) started this year off with strength. Earnings were soaring, and in the months that followed, the S&P 500 and the Nasdaq 100 invited the stock to join. Share performance even topped that of market darling Nvidia. The stock climbed 188% in the first half of the year compared to Nvidia's 149% increase. But times have been tougher for Supermicro in recent weeks. A research firm with a short position in the stock issued a report alleging troubles at the company. Around the same time, in an unrelated move, Supermicro delayed the filing of its 10-K annual report. And more recently, The Wall Street Journal reported that the Justice Department had launched a probe into Supermicro. All of this has weighed heavily on Supermicro, dragging the shares down 25% since the short report in late August. And that has the market wondering what's next for this technology company. My prediction is this is where Supermicro is headed in 2025... Before I talk about my prediction, though, let's take a look at a little background on Supermicro's path so far. This tech company isn't a new kid on the block, and instead, has been around for more than 30 years, selling workstations, servers and other equipment. Supermicro steadily increased its revenue and became profitable over time, but earnings really took off over the past couple of years as the artificial intelligence (AI) boom accelerated. Companies building AI platforms turn to Supermicro for their data center needs -- and Supermicro's strategy has helped it emerge as a winner, delivering a growth rate over the past 12 months that's five times faster than the industry average. Why is the company so successful? Supermicro works hand-in-hand with top chip designers along their development process so that it can immediately integrate their innovations into its products. Also, Supermicro's "building blocks" technology -- with most products sharing common parts -- makes it faster for the company to tailor a particular product to a customer's needs. All of this helped Supermicro deliver quarterly revenue this year that surpassed a full year of revenue as recently as 2021. And considering the projected growth of the AI market -- forecast to expand from $200 billion today to $1 trillion by the end of the decade -- Supermicro could continue to see revenue climb. Of course, the negative news of the past several weeks remains a headwind right now. Let's consider the details. Hindenburg Research, in its short report, alleged "glaring accounting red flags" and other problems at Supermicro. It's important to note that Hindenburg holds a short position in Supermicro, meaning it will benefit if the stock declines -- and this makes it difficult for us to rely on Hindenburg for unbiased information. Also, Supermicro responded to the report, saying claims were "false or inaccurate" and pledged to further address it in "due course." As for the delayed annual report, Supermicro also spoke further on this, saying it doesn't expect significant changes to its earnings figures. That should ease investors' minds. Finally, regarding the potential Justice Department probe, The Wall Street Journal cited people familiar with the matter -- but a probe hasn't been confirmed. And the Journal said spokespeople for Supermicro and the U.S. attorney's office declined to comment. Considering all of this, my prediction for Supermicro in 2025 is as follows. Right now, it's impossible to say whether the Justice Department has launched a probe. If it has and if it finds problems, this could weigh on the stock -- but only the extent of potential troubles would tell us to what degree. There are a lot of "ifs" there, though, and I prefer to go with what we actually know so far. And what we do know is that Supermicro's business has been strong in recent years, and demand from AI customers continues. In fact, these customers now are looking for cooling technology for their AI data centers -- and Supermicro is a specialist. This could represent a whole new wave of growth for the company as of 2025. On top of this, Supermicro, which reported a lower gross margin in the recent quarter, aims to open a new Malaysia factory at the end of this year -- a move that should reverse that trend with its focus on high volume and low cost. So, my prediction is, if allegations concerning the company aren't confirmed, Supermicro's earnings and stock price could surge in 2025. The average Wall Street estimate calls for an 87% increase in the coming 12 months, and if recent troubles don't gain traction, I think the stock could meet those expectations. Does this make Supermicro stock a buy? Possibly -- if you're an aggressive investor. Otherwise, though, and especially if you're a cautious investor, it's important to remember that the stock remains risky right now. And that means it's probably a good idea to wait for further clarity concerning the recent headwinds before picking up shares of this AI stock.

Super Micro Computer Stock Tumbles on Recent News. Time to Buy or Stay Away? | The Motley Fool

It's been a tough few months for Super Micro Computer (SMCI -1.07%), whose stock has come under pressure for a variety of reasons this year. The stock first dropped in April following a mixed reaction to its fiscal 2024 third-quarter results. That trend extended to its fourth-quarter earnings release in early August with declining margins worrying investors. The company was then the subject of a short-selling report in late August from Hindenburg Research, which accused the company of accounting manipulation, evading sanctions, and related-party self-dealings by management. Not helping matters, the company delayed the filing of its 10-K shortly following the short report, though management has denied any wrongdoing. On Sept. 26, the stock sank even further following a report from The Wall Street Journal alleging the Department of Justice (DOJ) is also investigating the company. Neither the DOJ nor the company have confirmed the investigation. And most recently, Supermicro completed its 10-for-1 stock split on Oct. 1. These various developments have all made the stock very volatile with shares down 66% from their March peak. But Supermicro is still up over 45% year to date, and that raises the question: What should investors do with the stock now? Supermicro designs and manufactures servers and storage systems. It assembles what is commonly referred to as white box servers, which are basically the generic-brand versions of servers, using commercially available retail computer parts. It competes against other white box server providers as well as brand name offerings from Dell, Lenovo, and Hewlett Packard Enterprise. The company has benefited from the massive data center buildouts as part of the artificial intelligence (AI) craze. The company's revenue has been surging with 143% growth in its fiscal 2024 fourth quarter (ended June 30) to $5.31 billion. Supermicro has credited its next-generation air-cooled and DLC rack scale AI GPU platforms for its strong growth. These systems are used to stop servers from overheating and failing while also reducing energy costs. While Supermicro has ridden strong AI tailwinds, it's ultimately in a highly competitive, low-margin business without a lot of differentiation. Its revenue may have soared last quarter, but its gross margin sank to 11.2% from 17.0% a year ago and 15.5% the previous quarter. The company blamed its margin pressure on a combination of product mix, reduced prices to win new designs, and the costs of ramping up its direct liquid-cooled (DLC) rack scale AI GPU clusters. Management is projecting its gross margin will gradually improve throughout fiscal 2025 and return to a range of 14% to 17%. An 11% gross margin is slim, and even 17% isn't exactly robust. By comparison, the chip companies fueling the AI infrastructure buildout have much higher gross margins with both Nvidia and Broadcom boasting gross margins of at least 60% last quarter. At this point, the short report allegations against Supermicro are just that, allegations. And investors must be aware Hindenburg Research released the report in the hopes of driving the stock price down for the benefit of its short position. The firm succeeded in doing just that. Meanwhile, the DOJ probe reported by The Wall Street Journal has remained unconfirmed by DOJ officials and company management. That said, Supermicro has run afoul of U.S. regulatory agencies in the past. The SEC fined the company in 2020 over accounting issues after accusing the company of shipping products to warehouses at quarter-end and recognizing it as revenue before the products reached customers. The company ultimately agreed to pay a $17.5 million fine without admitting or denying the details of the SEC investigation. Given this history, the Hindenburg report and DOJ news are a bit worrisome. However, Supermicro still sells real products, has real customers, and is benefiting from rapid AI development. Even before the company's latest headaches, I did not think Supermicro was a particularly good investment given its margin profile and pricey stock. Following these reports, the bull case becomes even harder to accept. Regarding valuation, though, the recent sell-off has made the stock a lot more attractive with a forward price-to-earnings (P/E) ratio below 10 and a price/earnings-to-growth (PEG) ratio of just 0.2. A PEG ratio under 1.0 is generally considered undervalued. However, as the below chart shows, it has been pretty common for the stock to trade at even lower valuations in the past. Given the uncertainty surrounding the stock, I'd stay on the sidelines. However, this is not a situation where investors should be rushing to sell out of their positions given Supermicro's current valuation and the growth of AI-related spending.

If You Bought 1 Share of Super Micro Computer Stock at Its IPO, Here's How Many Shares You Would Own Now | The Motley Fool

Even with some big sell-offs lately, Super Micro Computer stock is still up roughly 5,100% since its IPO. Super Micro Computer (SMCI -0.77%) had its initial public offering (IPO) in March 2007 at a price of $8 per share. The stock frequently saw volatile swings, but it started of 2020 priced at roughly $24 per share -- tripling its IPO price. While the performance came in just slightly ahead of the S&P 500's total return of 197.5% across that stretch, the stock's performance in this decade's trading has been nothing short of incredible. Spurred by rising demand for high-performance rack servers capable of training and running artificial intelligence (AI) systems, Supermicro's sales, earnings, and stock price have seen incredible growth. The stock climbed to as high as $1,229 per share earlier this year, and the company's management subsequently announced that it would move forward with a 10-for-1 stock split. While the company's share price has fallen substantially over the last few months, the split took effect on Oct. 1. The recently completed 10-for-1 stock split is the only split in the company's history. In other words, you would now have 10 shares if you bought one share of the company's stock on the day of its IPO and held onto its position. If you bought one share at the company's IPO price, you would now have 10 shares worth a combined total of roughly $416 as of this writing -- good for a 5,100% profit. On the other hand, Supermicro stock has actually fallen roughly 33% since the stock split was first announced in August. Stock splits have corresponded with rising share prices for some other companies, but the server-technologies specialist has been hit with multiple valuation headwinds recently. Catalysts for sell-offs have included disappointing gross margins, a bearish write-up short-seller from Hindenburg Research, a delayed 10-K filing, and a report that the company could be investigated by the DoJ. Supermicro's recent stock split hasn't changed any fundamental aspect of the business, but it's possible the split could make the stock more attractive to some investors.

One Stock That Could Soar After Its Oct. 1 Split | The Motley Fool

Super Micro Computer has some short-term headwinds dragging the stock down. Stock splits are usually good indicators of strength, since companies normally only split their stock after the price of an individual share has gotten expensive. Super Micro Computer's (SMCI 0.31%) split is coming soon -- the company expects its 10-for-1 split to take effect on Oct. 1 -- but it hit a rough patch shortly after announcing it. Since then, the stock is down around 32%. There are a few reasons for this, but I don't think any of them justify avoiding the stock as a long-term investment -- although investors must be aware of the risk they are taking on. Super Micro Computer manufactures components for data centers and builds full servers. This was a good business in recent years, and it has been a phenomenal business lately. Thanks to unprecedented artificial intelligence (AI) demand, companies are rushing to expand their computing capacity. This has caused businesses like Supermicro's to boom because it is a key supplier in this space. While it has many competitors, none offer a solution that is as customized as Supermicro's for a full server. And its liquid-cooled technology offers clients the most energy-efficient server available, which saves on long-term operating costs. These factors have combined to make Supermicro the top choice for data center components and full-server builds, which is why the stock has done so well this year. But there is more to Supermicro's investment thesis than its best-in-class products. Since the stock peaked in March this year, it has steadily declined. Part of this decline is warranted since the expectations priced into the stock at that time were unrealistic. However, the levels it has fallen to are too cheap, creating an exciting investment opportunity. The causes of the most recent stock drop following its earnings report for its fourth quarter (ending June 30) are twofold. First, Supermicro's gross margins have declined for many quarters. This isn't a great sign -- declining gross margins can indicate that Supermicro's products are becoming commoditized and that it's losing pricing power. However, management blames the launch of its new liquid cooling technology and other new products for the decline. It believes these gross margins will recover throughout fiscal 2025 and return to historical norms over the long term. Regardless, this will hurt profits in the short term, which investors don't want to see. This caused the initial stock decline following earnings. The second reason for the decline involves Hindenburg Research, a famed short-selling firm that benefits when stock prices drop. Hindenburg released a short-seller report alleging accounting malpractice by Supermicro, something that the company has already been fined for by the Securities and Exchange Commission (SEC). To make matters worse, Supermicro has delayed filing its end-of-year form 10-K with the SEC because, management said, it is assessing the "design and operating effectiveness of its internal controls over financial reporting." If you can't trust the financials a company is reporting, the stock becomes unworthy of an investment, which is why many dumped the stock following the report. But the company doesn't expect any changes to its financial results. So this could be a wake-up call for management to get its business in order, and will likely not be a factor in the long term, assuming its financials don't change and the Hindenburg report turns out inaccurate. That isn't the end of the Hindenburg saga, however. Shortly after the Hindenburg report, the U.S. Department of Justice opened at probe into Supermicro. This probe might come up with nothing. Still, there is a possibility that it could lead to further action, so the risk of investing in Supermicro has increased. Investors have a long time to wait until the results of this investigation are known. Meanwhile, these two short-term factors driving the stock down have opened up a long-term investment opportunity if it turns out that the company isn't found to have engaged in accounting malpractice. This can be seen in its forward price-to-earnings ratio (P/E), as the stock trades for a dirt-cheap 12 times forward earnings. That's cheap for any stock, let alone one set to grow its revenue between 74% and 101% in fiscal 2025. Couple that with steadily improving margins, and you have a recipe for a stock that could have a strong year once other questions are sorted out. I think Supermicro's stock could soar after its split. Multiple short-term factors are dragging it down, but should those be resolved favorably, Supermicro is primed to post excellent returns thanks to the massive demand for its products. For now, there is an increased risk of investing in Supermicro due to an ongoing government probe. This shouldn't cause you to ignore the stock completely, assuming you're willing to take the risk, but it should guide your position sizing if you choose to invest in the stock sometime soon.

Every Super Micro Computer Stock Investor Should Keep an Eye on This Number | The Motley Fool

Super Micro Computer is up more than 1,000% over the last three years, but down 66% from its high. What comes next for the AI stock? Super Micro Computer (SMCI 1.45%) stock is still up more than 1,000% over the last three years, thanks to rising demand for its high-performance rack servers tied to artificial intelligence (AI). Its share price is also down 66% from the lifetime high it reached earlier this year. While a wide range of factors will play a role in shaping the server specialist's future stock performance, investors should pay particular attention to one key metric. Gross profit is calculated by subtracting the cost to produce a product from the revenue generated on the sale of that product. Gross profit margins are a key indicator of pricing power and have a major impact on the overall profitability of a business. Notably, Supermicro's gross profit margins have been on a downward trend lately. The company's gross margin slipped to 11.2% in the fourth quarter of its 2024 fiscal year, which ended June 30. That performance was down from a gross margin of 15.5% in last year's third quarter and a gross margin of 17% in Q4 of fiscal 2023. Supermicro's high-performance rack servers are built around graphics processing units (GPUs) from Nvidia and hardware from other providers. On the heels of a sales and margin surge driven by AI-related demand, reliance on third-party hardware may have set the stage for gross margin contraction. Supermicro is betting on strong pricing power and differentiating its products through liquid-cooling technologies. Packing and running a group of high-powered GPUs and other hardware together can generate a lot of heat, and overheating can lead to system failures and permanent hardware damage. If Supermicro's liquid-cooling technologies for servers prove to be a major selling point, that could bolster the business's gross margins and power strong stock performance. If not, competitive pressures and moderating demand may drag the company's gross margins and share price lower.

Super Micro Computer's 10-for-1 Stock Split Is Happening Today. Here's What You Need to Know. | The Motley Fool

The move will leave the stock trading at a tenth of its current price. The big day has arrived for Super Micro Computer (SMCI 4.31%). The technology company's stock split happens after the market close, and the shares will begin trading tomorrow at their new -- and significantly lower -- price. Supermicro joins the list of other high-flying artificial intelligence (AI) stocks -- such as Nvidia and Broadcom -- that have completed such operations in recent months. These market giants have launched splits in order to make their shares more accessible to a broader range of investors. Supermicro shares have soared in recent years as the AI boom accelerated, helping revenue to climb in the triple digits. AI customers have rushed to Supermicro for its servers, workstations, and other products that it tailors to suit their data centers. As Supermicro shares climbed 188% in the first half, even surpassing gains of Nvidia and reaching beyond the $1,000 mark, investors speculated that a stock split may be next on the agenda. And Supermicro went on to announce a stock split when it reported quarterly earnings in August. But unlike peers Nvidia and Broadcom, Supemicro shares haven't climbed following the decision. That's as other news in recent weeks weighed on the stock: Hindenburg Research published a short report alleging troubles at the company, and separately, Supermicro delayed the filing of its 10-K annual report. Finally, just last week, The Wall Street Journal reported that the Justice Department may have launched a probe into the company following the short report. All of this has left Supermicro shares down nearly 30% since Hindenburg's publication in late August. Today, though, Supermicro's stock split is unfolding, and it's a great time to take a closer look at the company. Here's what you need to know. First, a bit of background on stock splits. As mentioned, these operations lower the per-share price of a stock to make it easier for more people to buy -- and this is done by issuing additional shares to current holders. The move doesn't change anything fundamental about a company, so valuation and market value remain the same. Though the per-share price declines, stock splits don't make the shares any cheaper. This also means a stock split, on its own, isn't a reason to buy a particular stock and won't act as a catalyst to drive the price higher. A stock split could be seen as a positive move for a company, though, since it may drive more investors to the stock over time. And it suggests that the company's management is optimistic about the future, with the idea that the stock has what it takes to climb from its new lower price. Now, let's move on to the Supermicro operation. Supermicro is launching a 10-for-1 stock split, which means holders of one share will receive nine additional shares after the market close today. The total value of the holding won't change, though each share will be worth a tenth of its original value. So, using the current level of Supermicro stock as a guide, the value of one share should decline from about $400 to $40. And this means Supermicro stock will open at the new split-adjusted price of around $40 tomorrow, Oct. 1. If you're a Supermicro shareholder, you don't have to do a thing. All of this will happen automatically, and the extra shares will appear in your brokerage account. If you're not yet a Supermicro shareholder, you may be wondering what happens if you buy the stock today, right before the split. You, too, will receive the extra shares since the right to them transfers over from the seller. Finally, if you wait until tomorrow to buy the stock, you'll get it at the split-adjusted price. Is it a better idea to buy now or wait until after the split? It's true the split will make it easier for you to buy Supermicro if you want to invest less than the current $400 share price. With $100, for example, you can easily pick up a couple of shares post-split. So, if this is your situation, for convenience, you may want to wait until after the split. But aside from that particular scenario, it really doesn't matter if you buy the stock before or after the operation -- because, as I talked about above, this move only alters the per-share price. Now let's answer one more question: Considering the news I mentioned above, should you really buy Supermicro shares? It's true that Supermicro is looking particularly cheap right now, trading at only 11x forward earnings estimates. Very aggressive investors may consider picking up a few shares at these levels. It's important to remember that Hindenburg Research holds a short position in Supermicro, meaning the firm benefits from a decline in the stock price. In short selling, investors borrow shares of a company, sell them, then purchase them once again -- ideally at a lower price -- to return to the original owner. This means Hindenburg has a bias, making it difficult to rely on the firm as a source of information. Meanwhile, a Justice Department probe hasn't been confirmed -- and if a probe is confirmed at some point, this doesn't imply wrongdoing. Earlier this month, Supermicro responded to concerns about the Hindenburg report and its own delayed annual report filing. The company called Hidenburg's statements "false or inaccurate" and pledged to address them in "due course." Supermicro also said it didn't expect the delayed filing of its annual report to result in major changes to its earnings report. The company declined to comment on the Justice Department probe report, The Wall Street Journal said. So from the information we have today, Supermicro's story still looks solid, and considering the company's leadership in the market and the demand from AI customers, its long-term prospects remain bright. That said, uncertainty remains, and even post-split, the stock may remain volatile. For most investors, it's a good idea to wait to buy until Supermicro fully addresses statements in the Hindenburg report or offers further clarifications. There's reason to be optimistic about this company over the long term, but it's best to gather all of the facts before making any moves -- to buy or sell.

Why is Super Micro Computer's stock price so 'low' today? Don't worry. SMCI just split

Since the end of August, Super Micro Computer, Inc. has had a rough time. The company, also known as Supermicro, is one of America's largest manufacturers of high-end servers -- like the kind needed to power AI tasks. It took a beating in the stock market recently when activist investment short-selling firm Hindenburg Research released a report that alleged "glaring accounting red flags" at the company. After Hindenburg's report was made public, Super Micro Computer's stock (NASDAQ: SMCI) fell 20% to $443 per share. Then last week, news of a possible Department of Justice (DOJ) probe into the company, possibly over those aforementioned "glaring accounting red flags," sent the stock down another 12% to below $400 per share. (Supermicro didn't respond to our request for comment about the rumored investigation, which was reported by Bloomberg.) But today, SMCI's share price is even lower, with shares now trading at around $42 as of the time of this writing. But if you're an SMCI investor -- don't panic. The stock hasn't crashed. It's just split. Here's what to know:

Super Micro Computer's big stock split is today. Here's what to know

Super Micro Computer (SMCI) is set to undergo a stock split after the market closes on Monday, aligning itself with other prominent AI-driven companies like Nvidia and Broadcom, which also executed stock splits earlier this year. Following the split, the stock will begin trading Tuesday at its adjusted -- and substantially lower -- price. Shortly after the market opened on Monday morning, Super Micro Computer's shares were priced at $426, reflecting a 1.5% increase. Super Micro Computer's 10-for-1 stock split is expected to boost demand for the company's shares. In a stock split, the company increases the number of shares, reducing the share price, but the total dollar value of all shares outstanding remains the same and doesn't affect the company's valuation. Super Micro Computer's 10-for-1 split means that, for each SMCI share an investor owns, they will receive an extra nine after the split is completed. The San Jose-based IT company, which makes hardware that supports AI applications, thrived this year due to the high demand for AI and entered the Fortune 500 at No. 498. As a key partner and reseller of Nvidia's (NVDA) GPUs and other components, Super Micro integrates its technology into its servers to support AI workloads. Super Micro CEO Charles Liang and Nvidia CEO Jensen Huang, are both Taiwanese immigrants and have a long-standing relationship. Super Micro Computer went through a rough phase in September when a short seller, Hindenburg Research, published a scathing report accusing the company of accounting red flags and questionable business dealings, including potential sanctions evasion from exports to Russian and Chinese firms. Following these accusations, Super Micro's stock price took a significant hit. The company refuted the claims, stating that the report contained misleading and inaccurate information and that it would address the allegations in due course.

Wall Street's Most Anticipated Artificial Intelligence (AI) Stock Split of the 4th Quarter Has Arrived | The Motley Fool

Following stock splits from artificial intelligence (AI) juggernauts Nvidia and Broadcom, it's time for another AI leader to take center stage with a forward split of its own. For much of the last 30 years, investors have had a next-big-thing technology or trend to captivate their attention. The rise of the internet, business-to-business commerce, and cloud computing are just some of the big-dollar addressable markets that have lured investors. But on rare occasion, two hot trends vie for Wall Street's attention at the same time. In 2024, we've witnessed the artificial intelligence (AI) revolution and stock-split euphoria converge to lift the stock market's major indexes to record-closing highs. A stock split is a tool publicly traded companies have available to cosmetically adjust their share price and outstanding share count by the same factor. What makes these share price adjustments "cosmetic" is that they have no impact on a company's market cap or operating performance. Though there are two varieties of stock splits -- forward and reverse -- investors focus most of their attention on companies completing forward stock splits. Whereas reverse splits, which increase a company's share price, are often conducted from a position of operating weakness, the businesses enacting forward splits are pretty consistently outpacing their competition with regard to innovation and operational execution. Since the start of 2024, a little north of a dozen noteworthy companies has announced and/or completed a stock split. All but one of these high-profile splits is of the forward variety, which aims to make shares more nominally affordable for everyday investors. With AI stocks surging in 2024, it's no surprise that some of the most-prominent stock splits are leading AI companies. But after the close of trading today, Sept. 30, the most-anticipated AI stock split of the fourth quarter will take center stage. Over the last four months, Nvidia (NVDA -2.13%) and Broadcom (AVGO -3.03%) have hogged the headlines among artificial intelligence stocks -- and for good reason. On May 22, Nvidia became the first AI stock to announce its intent to split its shares. Following a greater than $2 trillion increase in Nvidia's market cap in less than 17 months, the company's board declared a 10-for-1 forward split, which went into effect following the close of trading on June 7. Nvidia's historic increase in value relates to its early stage dominance of the AI-graphics processing unit (GPU) market. The company's variety of GPUs, including the ultra-popular H100, hold a virtual monopoly in enterprise AI-accelerated data centers. Investors are also clearly excited about the upcoming release of the next-generation Blackwell GPU architecture, which is considerably more energy efficient than its predecessor chip and can accelerate everything from generative Ai solutions to quantum computing calculations. Nvidia hasn't been shy about investing in innovation and should have no trouble retaining its AI-GPU computing advantages for the foreseeable future. Meanwhile, AI networking solutions provider Broadcom announced its first-ever stock split in mid-June. This 10-for-1 forward split went into effect after the close of trading on July 12. Just as businesses are counting on Nvidia's hardware to be the brains of high-compute data centers, Broadcom's networking solutions are leaned on to minimize response times for requests -- something critical for AI-driven software and systems -- and maximize the computing capacity of AI GPUs. While Broadcom's rapid growth stems from its AI solutions, it's a company with a considerably more diverse revenue stream than leading AI stock Nvidia. For instance, it's one of the largest providers of wireless chips and accessories used in next-generation smartphones. A consistent device-replacement cycle fueled by the 5G revolution has been music to Broadcom's ears. While Nvidia was the cream of the crop among AI stock-split stocks during the second quarter, and Broadcom's split hogged the spotlight in the third quarter, there's a new AI stock split ready for its moment in the sun. When after-hours trading officially ends on Sept. 30, customizable rack server and storage solutions company Super Micro Computer (SMCI 4.31%) will complete its first-ever split since going public more than 17 years ago. Similar to Nvidia and Broadcom, Super Micro's split is 10-for-1, which will reduce its nominal share price to around $40 per share. Shares of Super Micro have skyrocketed 779% over the trailing-two-year period, with demand for AI infrastructure leading the charge. Sales for the company more than doubled to $14.9 billion in fiscal 2024 (ended June 30), with the midpoint of the company's current guidance for fiscal 2025 at $28 billion. CEO Charles Liang foresees annual sales eventually reaching $50 billion. Something else working in Super Micro's favor is the incorporation of Nvidia's prized H100 GPUs into its AI-focused rack servers. Relying on this top hardware has made it something of a go-to for businesses wanting to gain an edge over their competition and/or secure a first-mover advantage. But there are, ultimately, two sides to this coin. While Nvidia's H100 is exceptionally popular and the preferred hardware choice in AI-accelerated data centers, it's also backlogged due to overwhelming demand. Super Micro Computer's reliance on Nvidia's AI-GPUs comes with the risk of not being able to meet the demand of its own clients. Another risk for Super Micro Computer is the potential for the AI bubble to burst. There hasn't been a next-big-thing technology or trend for at least 30 years that's avoided a bubble-bursting event. This is to say that investors always overestimate how quickly a new technology or trend will be adopted and gain utility. With most businesses lacking a clear game plan to generate a positive return on their AI investment, at least in the early going, all signs point to artificial intelligence being the next in a long line of highly touted bubbles. If the AI bubble were to burst, as history suggests it will, it wouldn't be the first time that hype surrounding Super Micro failed to live up to expectations. Growth forecasts for the company were through the roof in the mid-2010s. Unfortunately, the rise of cloud computing failed to meet these lofty expectations, which sent the company's stock spiraling lower. I'd be remiss if I didn't also mention that noted short-seller Hindenburg Research has alleged that Super Micro Computer engaged in "accounting manipulation." The Wall Street Journal also reports that the U.S. Justice Department has launched an early stage probe into the company. Although Super Micro has denied these claims, the company did delay the filing of its annual report. Despite Liang stating that he has confidence in his company's internal teams and doesn't anticipate any material changes to the company's reported financials, this filing delay clearly has investors skittish. With Super Micro Computer's much-anticipated stock split finally here, we'll soon find out which side of the aisle the retail investing community prefers.

What You Need To Know About Super Micro Computer's 10-for-1 Stock Split

Server maker Super Micro Computer (SMCI) announced a 10-for-1 stock split last month that will take effect after the closing bell on Monday. Shareholders will receive nine new Super Micro Computer shares for every one they already own. Their overall stake in the company won't change, but the stock will subsequently trade for 10% of its previous price. In other words, if Super Micro Computer shares were trading at $1,000 before the split, an investor holding one share before the split would hold 10 shares priced at $100 each after the split. (Companies can also hold reverse splits, as some have done lately.) Super Micro Computer shares skyrocketed early in 2024 to a high of nearly $1,200 due to surging demand for artificial intelligence infrastructure. They traded closer to $600 when the split was announced, and closed Friday at about $419.74. The shares have lost nearly half their value over the past three months, thanks in part to disappointing recent results. Even so, the stock is still roughly 49% higher year-to-date.