Super Micro Computer, Inc. (SMCI) Posts Strong Q4 Sales Growth, Showcases AI Solutions with NVIDIA
We recently compiled a list of the Goldman Sachs’ 35 AI Superstars.In this article, we are going to take a look at where Super Micro Computer, Inc. (NASDAQ:SMCI) stands against the other AI stocks.
In September 2024, Peter Oppenheimer, the chief of global equity strategy and the head of macro research for Goldman Sachs in Europe, opined that the rise of tech stocks due to the AI boom was not indicative of a financial bubble. Instead, per the Goldman bigwig, the performance of these companies was expected to continue delivering solid returns to investors, fueled by the rise of AI superstars outside of the magnificent seven, among smaller tech firms and in non-tech sectors. In the months since, the AI hype has only grown stronger, leading to a massive surge in the value of tech offerings, only offset by the recent emergence of Chinese AI startup DeepSeek which is positioning itself as a budget ChatGPT. The success of this Chinese startup, popularized by the downloads that the DeepSeek application has achieved on the mobile operating system markets, has led to a downward spiral in American tech futures.
Although the tech sector selloff has caught many investors by surprise, a new investor note by Goldman Sachs, as seen by news agency Reuters, contends that hedge funds were already anticipating this slump. Per the Goldman report, in the last two weeks, hedge funds have significantly reduced their positions in technology stocks. This retreat is part of a broader trend, as hedge funds have remained hesitant to reinvest in tech-related sectors following the sell-off from June to August last year. Alongside selling major technology stocks, hedge funds have also been offloading shares in adjacent industries, such as power and energy companies that would benefit from AI advancements—especially those supporting data centers and electric vehicle infrastructure.
However, Goldman remains bullish on AI futures. Per Oppenheimer, tech stocks have dominated global and US equity returns since 2010, contributing 32% and 40%, respectively. The Goldman executive further claims that unlike speculative bubbles, these gains are backed by strong financials, with tech sector earnings per share surging 400% since the 2008 financial crisis, compared to a modest 25% increase across other sectors. Hyperscale companies in software and cloud computing have been key drivers of this growth, leveraging their vast resources and high profitability, he notes. Recent AI advancements have further boosted their valuations, concentrating gains among a few market leaders. Oppenheimer highlights that this pattern is consistent with past technological innovations, where capital inflows and competition drive rapid growth before eventual consolidation.
While dominant AI companies today were also leaders in the previous tech wave, new competitors are emerging, he predicts. The report further notes that the number of AI patents jumped from 8,000 in 2018 to over 60,000 in 2022, signaling growing competition. History suggests that the companies pioneering a technology may not be the ones to benefit most in the long run, Oppenheimer claims. Just as internet infrastructure investments paved the way for social media and ride-sharing dominance, the greatest value in AI may emerge from new players that leverage current advancements in unexpected ways, per the Goldman strategist. The Oppenheimer point of view is echoed in the latest Goldman report. This report highlights that over the past year, hedge funds have been more inclined to sell rather than buy stocks that would typically gain value from a US-driven AI boom.
However, a smaller group of hedge funds has maintained long positions, meaning they are betting that stock values will rise. In fact, these hedge funds currently hold the highest number of long positions in two years, indicating some confidence in future AI-driven growth, the report adds. Goldman underlines that the investment climate in AI has been heavily influenced by substantial spending from major US technology firms. Following the success of ChatGPT, companies have invested tens of billions of dollars in AI infrastructure. Notably, OpenAI and SoftBank recently committed $19 billion to fund Stargate, a joint venture aimed at developing AI data centers in the United States. Despite these large-scale investments, competition from international players such as Chinese AI startup DeepSeek has raised concerns about the long-term sustainability of US leadership in the AI sector.
Bruno Schneller, managing director at Erlen Capital Management, noted that hedge funds are adopting a cautious wait-and-see approach toward US AI-related stocks. Schneller further highlighted that large projects like Stargate come with significant regulatory complexities. The ongoing uncertainty regarding regulatory execution and enforcement has left many investors wary, contributing to the market’s volatility. While the US AI sector continues to receive significant investments, hedge funds remain uncertain about its profitability in the face of growing international competition and regulatory uncertainties. This cautious stance has led to stock market fluctuations, with many hedge funds opting to sell their tech-related holdings while a select few continue to maintain long positions, betting on future growth.
Our Methodology
For this article, we selected AI stocks by combing through a note on the AI industry by investment bank Goldman Sachs. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Are Analysts Talking About Super Micro Computer Inc. (SMCI)?
A team of technicians in a server room, testing and managing the newest server solutions.
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and manufactures high-performance server and storage solutions based on modular and open architecture. This company offers a range of qualities that make it a compelling investment. For instance, as illustrated in the fiscal year 2024 fourth fiscal report, reported net sales were $5.31 billion versus $3.85 billion in the third quarter, and $2.18 billion in the same quarter of last year. It demonstrates the company’s strong market demand, expansion in sales, and ability to scale operations effectively. In addition, the company, in collaboration with NVIDIA, is showcasing the latest solutions for the retail industry at the National Retail Federation. As generative AI grows in capability and becomes more easily accessible, retailers are leveraging NVIDIA NIM microservices, part of the NVIDIA AI Enterprise software platform, for a broad spectrum of applications.
Overall SMCI ranks 33rd on our list of Goldman Sachs’ AI superstars. While we acknowledge the potential of SMCI as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
United Parcel Service (UPS) Stock Trades Down, Here Is Why Shares of parcel delivery company UPS (NYSE:UPS) fell 17.6% in the morning session after the company reported weak fourth-quarter results and provided full-year revenue guidance, which missed significantly. Adding to concerns, UPS announced an agreement with its largest customer (Amazon) to cut volume by more
An AI model from the Chinese start-up sent America’s tech industry into a full-on panic. Illustration by The Atlantic January 30, 2025, 1:13 PM ET This is Atlantic Intelligence, a newsletter in which our writers help you wrap your mind around artificial intelligence and a new machine age. Sign up here. Earlier this week, almost
We recently published a list of the 12 Best Stocks to Buy in 2025 for Beginners. In this article, we are going to take a look at where Apple, Inc. (NASDAQ:AAPL) stands against other best beginner stocks to buy in 2025. On December 12, Tom Lee, Fundstrat Global Advisors managing partner and head of research,
We recently compiled a list of the Jim Cramer Discussed These 11 Stocks Before The DeepSeek Sell-Off. In this article, we are going to take a look at where NVIDIA Corporation (NASDAQ:NVDA) stands against the other stocks. In a fresh appearance on CNBC’s Squawk on the Street, Jim Cramer cautioned viewers to not be caught
U.S. stocks opened mostly higher as investors digested a slew of corporate earnings reports, including some from the so-called Magnificent 7. Magnificent 7 stocks are mega-cap technology companies whose shares have significant weighting in major stock indexes and have led much of the rally in stocks the past few years. They are Apple, Microsoft, Amazon, Alphabet
Listen and subscribe to Opening Bid on Apple Podcasts, Spotify, YouTube or wherever you find your favorite podcasts. Let’s just call DeepSeek the plot twist the AI world didn’t see coming. It also has market darlings like Nvidia (NVDA) asking investors, “what about me?” After plummeting in price Nvidia’s stock remains on the slide while
US stock futures stepped higher on Thursday, eyeing a comeback as investors digested earnings from a trio of megacap techs and waited for Apple (AAPL) results for more clues to the prospects for Big Tech. Contracts on the tech-heavy Nasdaq 100 (NQ=F) rose 0.5%, while S&P 500 futures (ES=F) moved up 0.3%. Dow Jones Industrial
Timothy St. John•Thursday, January 30, 2025•2 min read Add an article to your Reading List Register now to be able to add articles to your reading list. ” aria-hidden=”true”> Share in Facebook “> On Wednesday, at the first Federal Reserve meeting since President Donald Trump took office, the Fed decided to keep the key interest
Chinese artificial intelligence firm DeepSeek rocked markets this week with claims its new AI model outperforms OpenAI’s and cost a fraction of the price to build. The assertions — specifically that DeepSeek’s large language model cost just $5.6 million to train — have sparked concerns over the eyewatering sums that tech giants are currently spending
The artificial intelligence (AI) revolution is on a collision course with history. For more than two years, Wall Street’s bull market rally has been virtually unstoppable. While there are a confluence of factors pushing wind into the stock market’s sails, including better-than-anticipated corporate earnings, stock-split euphoria, and Donald Trump’s Election Night victory, no catalyst has
The painful sell-off in stocks on Monday doesn’t signal the start of a bear market, Goldman said. Strong macroeconomic conditions will hold up the market. Monday’s retreat was a rethinking of high valuations among tech stocks, not weak fundamentals. The market’s dramatic free fall on Monday may have spooked investors this week, but the event
DeepSeek R1 is now available in the model catalog on Azure AI Foundry and GitHub, joining a diverse portfolio of over 1,800 models, including frontier, open-source, industry-specific, and task-based AI models. As part of Azure AI Foundry, DeepSeek R1 is accessible on a trusted, scalable, and enterprise-ready platform, enabling businesses to seamlessly integrate advanced AI.
Larry Ellison, Oracle Co-Founder And One Of Richest Men In The World, Saw His Net Worth Dip $22.6 Billion In One Day Due To DeepSeek Selloff Larry Ellison, the Oracle (NYSE:ORCL) co-founder and one of the richest people on the planet, watched $22.6 billion disappear in a single day on January 27—and he didn’t even
Hong Kong CNN — Previously little-known Chinese startup DeepSeek has dominated headlines and app charts in recent days thanks to its new AI chatbot, which sparked a global tech sell-off that wiped billions off Silicon Valley’s biggest companies and shattered assumptions of America’s dominance of the tech race. But those signing up for the chatbot
Nvidia (NVDA) is falling 4% after Alibaba (BABA) reported today that its new AI model performs better than DeepSeek’s offering. The latter Chinese start-up’s model, which reportedly performed better than OpenAI’s product in a number of areas, cost only about $5.6 million to train, according to DeepSeek. BABA’s news may be renewing fears, first ignited
Fundstrat chief investment officer Tom Lee says the market sell-off triggered by the release of low-cost Chinese artificial intelligence (AI) model DeepSeek is an overreaction. In a new interview on CNBC’s “Closing Bell,” Lee says that Monday’s market correction is likely an opportunity for long-term investors. Stocks and crypto plummeted on Monday as investors processed
When it comes to AI, I’d consider myself a casual user and a curious one. It’s been creeping into my daily life for a couple of years, and at the very least, AI chatbots can be good at making drudgery slightly less drudgerous. But whenever I start to feel convinced that tools like ChatGPT and
Listen and subscribe to Opening Bid on Apple Podcasts, Spotify, YouTube, or wherever you find your favorite podcasts. DeepSeek has caused a permanent reset in how AI development will unfold in coming years. At least that’s the take from Snowflake (SNOW) CEO Sridhar Ramaswamy, whose data storage company provides technology used by companies developing large
U.S. stocks closed lower after the Federal Reserve left interest rates unchanged and took a less confident view on inflation, and chip darling Nvidia renewed its slide on a report President Donald Trump’s considering restricting the company’s sales to China. Nearly everyone expected the Fed to keep interest rates steady, but the Fed dropped in
Photo: Bloomberg (Getty Images) The Nasdaq and other major indices declined following the Federal Reserve’s first meeting of the year, with the tech-heavy index falling 1.1% by the afternoon as investors digested the central bank’s cautious stance on interest rates. The Federal Open Market Committee kept the overnight borrowing rate unchanged in the 4.25% to
