Super Micro Computer, a leading computer assembly giant, has recently announced a 10-for-1 stock split. Despite CEO Charles Liang’s optimism about the company’s record demand for AI infrastructure racks, the timing of the split has raised some red flags.
Currently, SMCI stock is trading down over 12% at around $534 per share, with a market capitalization of approximately $31 billion. The split is scheduled to take place on Oct. 1, where investors holding 100 shares will then own 1,000 shares post-split.
However, Super Micro’s failure to meet earnings estimates, along with a decline in margins, has caused concerns among investors. The company’s primary business of assembling Nvidia chips into data center racks for cloud customers has also faced challenges, as Nvidia stock has dropped 12% since its own split in June.
While there is uncertainty surrounding AI applications and hardware demand, enterprise vendors like ServiceNow are experiencing significant demand for their AI offerings. On the other hand, general-purpose AIs like Microsoft’s Copilot and Alphabet’s Gemini are receiving mixed reviews.
As Super Micro heavily relies on Nvidia systems for its growth, any setbacks in Nvidia’s business could impact SMCI stock. The company’s expansion plans in Malaysia and Silicon Valley are in progress, but the future remains uncertain.
Analysis:
Super Micro Computer’s stock split announcement comes at a time of both optimism and concern. While the company sees record demand for its products, its reliance on Nvidia and cloud giants poses risks to its future growth. Investors should closely monitor developments in the AI and hardware markets to assess the potential impact on SMCI stock.