Super Micro Computer (SMCI 2.68%) stock is posting big gains in Thursday's trading. The company's share price was up 15.4% as of 1:15 p.m. ET.
NASDAQ: SMCI
Key Data Points
Supermicro stock is gaining ground on the heels of Nvidia's recently published third-quarter results. Supermicro is one of Nvidia's largest customers, and the artificial intelligence (AI) leader's Q3 results, commentary, and forward guidance are sending bullish signals for other AI stocks.
Nvidia's Q3 results boost Supermicro
Nvidia published its Q3 results after the market closed yesterday and reported sales and earnings for the period that beat Wall Street's expectations. The company reported non-GAAP (adjusted) earnings per share of $0.81 on revenue of $35.08 billion, beating the average analyst estimate's call for per-share earnings of $0.75 on revenue of $33.16 billion.
The company also said that it was expecting revenue of roughly $37.5 billion in the fourth quarter, surpassing the average analyst estimate's call for sales of $37.08 billion in the period. On the heels of 94% year-over-year sales growth in Q3, the company's guidance for Q4 suggests annual sales growth of roughly 70%.
Nvidia's strong performance and outlook suggest a favorable demand backdrop for Supermicro. And while some reports have suggested that the GPU leader has been diverting orders from Supermicro in favor of other customers, Nvidia CEO Jensen Huang name-checked the server specialist as one of his company's "great partners" during its conference call.
What's next for Supermicro stock?
Nvidia's Q3 report and commentary suggest that spending on AI infrastructure continues to be quite strong and will remain so in the near term. The company's GPUs are the core components of Supermicro's high-performance AI servers, and its sales performance and forward guidance provide trustworthy bellwethers for the kind of demand backdrop the server specialist is seeing.
On the other hand, there are still questions surrounding Supermicro that make the outlook for its stock unclear. The company was recently able to avoid having its stock delisted from the Nasdaq stock exchange by submitting a filing plan to regain compliance with the Securities and Exchange Commission (SEC).
Ernst & Young resigned as Supermicro's financial auditor in October due to concerns about the reliability of information from the company's management and audit committee. BDO has now come on board as the tech specialist's auditor. With BDO now hired, the company should be able to progress with the filing of its annual 10-K report for its last fiscal year. But there's still a risk that the stock could be delisted from the Nasdaq -- or that previously reported financial results could see significant downward revisions.
