Nvidia (NVDA 3.17%) and Super Micro Computer (SMCI 33.18%) both are playing key roles in one of today's hottest growth areas: artificial intelligence (AI). Nvidia sells graphics processing units (GPUs) that power critical tasks such as the training and inferencing of models, along with many other related products and services. Supermicro is a behind-the-scenes player, integrating these and other top AI chips into its servers and workstations for data centers.
Both companies have seen earnings soar in recent quarters, thanks to demand from AI customers. This has translated into share performance, with Nvidia and Supermicro advancing 2,600% and 1,700%, respectively, over the past five years.
Investors who got in on these stocks early greatly benefited, and one, in particular, is billionaire David Shaw. His company D.E. Shaw & Co. has held shares of Nvidia since 2008 and shares of Supermicro since 2022. Computer-scientist Shaw founded the hedge fund back in 1988 and specializes in quantitative investing, a process involving computational methods to make decisions.
D.E. Shaw has more than $60 billion in investments and committed capital, and the company's top five holdings all are active in the area of AI. In the third quarter, Shaw took action on Nvidia and Supermicro. Read on to find out which one he bought and which one he sold.
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Nvidia
Nvidia has built an AI empire in recent years and dominates the AI chip market today. The company is Shaw's biggest position -- and he added to it in the recent quarter. He increased his holding by 53% to 17,210,271 shares. It's impossible to predict with 100% accuracy if this will be a winning decision, but there are plenty of clues that suggest this AI company's successes are just getting started.
One of these successes is Nvidia's commitment to innovation. The company pledges to update its GPUs on an annual basis, a promise that should keep it ahead of rivals. Right now, Nvidia may be taking a huge step when it comes to setting itself apart from the rest with the launch of its new architecture, Blackwell. The platform may be a game changer, offering customers speed, efficiency, and various features that can be customized to suit their needs.
NASDAQ: NVDA
Key Data Points
Blackwell demand is "staggering," Nvidia said during its recent earnings call and predicted billions of dollars in revenue during this current quarter -- its first quarter of commercialization. This is against an already bright backdrop.
Nvidia's revenue has soared in the triple digits in most of the recent quarters, reaching record levels each period. In the latest quarter, revenue topped $35 billion, and Blackwell should add more fuel for gains in the quarters to come.
Supermicro
Supermicro works hand in hand with Nvidia and other chip giants, integrating their innovations into its equipment, so the company actually benefits from its own products and from the new launches of these partners. In the recent quarter, Shaw cut his position in Supermicro by 89% to 273,060 shares.
Shaw hasn't been the only one to reduce his position in Supermicro in recent times as this AI giant has faced various troubles linked to its financial reporting. The key element that's weighing on Supermicro right now is that it's fallen behind in this reporting and even lost its auditor.
This delay puts it at risk for a Nasdaq delisting. The good news, though, is Supermicro recently hired a new auditor and says it aims to file its annual and quarterly reports according to the new timetable determined by the Nasdaq.
NASDAQ: SMCI
Key Data Points
The recent turmoil has weighed heavily on Supermicro shares, dragging them down 28% since late August. If the company can return to reporting compliance, it may have bright days ahead. After all, demand from AI customers is strong and the AI market is in its early stages of growth. Right now, however, many investors, including Shaw, have decreased their positions in Supermicro.
