Updated: Super Micro Computer stock rises as optimistic earnings forecast indicates strong demand for artificial intelligence

Update stock prices at market open

Reuters, October 21 - Super Micro Computer (SMCI.O) shares surged more than 11% on Wednesday, after the company projected quarterly revenue (link) and profit margins would far surpass Wall Street expectations, indicating continued strong demand for artificial intelligence data centers.

The AI server manufacturer's stock rose by 11.6% to $36.25, setting a new one-week high.

Details as follows:

• According to data compiled by London Stock Exchange Group (LSEG), Super Micro Computer expects first-quarter revenue to be between $18.5 billion and $19.5 billion, surpassing analysts' expectations of $15.23 billion

• The company now expects profit margins to be between 12% and 12.5%, compared to its prior guidance of 10.4% to 10.8%

• The current boom in data center construction has largely benefited semiconductor and AI server manufacturers, including Super Micro Computer

• Spending by Microsoft, Google, Amazon, and Meta on AI infrastructure is expected to exceed $700 billion this year

• Other server makers Dell (DELL.N) and Hewlett Packard Enterprise (HPE.N) also saw their shares rise by 5.1% and 3.2% respectively

  https://www.reuters.com/graphics/SUPERMICROCOMP-STOCKS/akpelyqqwvr/chart.png

• UBS Global Wealth Management strategists said: "Investors may focus on whether the strong performance of core businesses can continue to support high levels of AI investment."

• The firm added that the market will closely scrutinize comments from AI giants regarding spending, profit margins, and returns to determine if the AI capital expenditure cycle is justified

• Recently, there has been market concern about the profitability of data center operators, who are raising funds for expansion projects through bond issuance while borrowing costs are rising

• Heavily indebted data center operator CoreWeave (CRWV.O) became the focal point of a sell-off last week (link), and the sell-off also affected stocks related to artificial intelligence

(To facilitate non-native English speakers, Reuters automatically translates its reports into several other languages. As automated translation may contain errors or lack necessary context, Reuters does not guarantee the accuracy of automated translation and provides it solely for reader convenience. Reuters takes no responsibility for any harm or loss arising from the use of automated translation services.)