Shares of Super Micro Computer (SMCI 0.22%) are rising on Thursday. The company's stock gained 4.9% as of 2:11 p.m. ET and had gained as much as 5.2% earlier in the day. The leg up comes as the S&P 500 gained 1% and the Nasdaq Composite gained 2% on the day.
A day after dropping nearly 20%, the AI server company's stock is rising after Microsoft and Meta Platforms reiterated in their Wednesday earnings calls that artificial intelligence (AI) spending was continuing apace.
AI spending is still strong
Microsoft confirmed yesterday it's on track to spend $80 billion in capital expenditures (capex) while Meta raised its capex forecast for the year by as much as $7 billion, now expecting to spend between $64 billion and $72 billion. The vast majority of these spends will be targeted toward AI infrastructure.
The revelation that AI spending from some of the biggest companies in tech would not slow down was a breath of fresh air for much of the industry. Supermicro had released preliminary numbers ahead of its earnings call on May 6 that spooked investors, leading to yesterday's 20% drop in the stock price. The positive reports from Microsoft and Meta served as a counterbalance to Supermicro's preliminary numbers, buoying investor sentiment.
Supermicro has some issues
Still, while the continued spending from tech giants is good news for the industry as a whole, Supermicro's own numbers were damning. The company expects to report $0.29 to $0.31 in earnings per share (EPS), which is well off Wall Street's target of $0.54. This comes at a time when the company is mired in controversy surrounding its accounting practices and the high-profile resignation of its auditor, Ernst & Young. I would stay away from Supermicro stock.
