AI stocks surged: one of the largest server suppliers eased market concerns
Supermicro's preliminary results exceeded Wall Street's expectations / Photo: Michael Vi / Shutterstock.com
Shares of companies in the artificial intelligence sector surged in after-hours trading on October 20: Strong preliminary results from server manufacturer Super Micro Computer eased investors’ concerns about the outlook for spending on this technology, according to Bloomberg.
Supermicro’s stock price soared by more than 15%. Shares of its competitors in the computing equipment market—Dell Technologies and Hewlett Packard Enterprise—jumped by 5.5% and 5.2%, respectively. Shares of CoreWeave and Nebius, which provide cloud computing power for AI, gained more than 4%. The VanEck Semiconductor ETF rose 2.2%, while futures on the Nasdaq-100 technology index climbed 0.7%.
Investor sentiment was also bolstered by Elon Musk's SpaceX earnings report: the company's quarterly revenue and profit exceeded forecasts thanks to growth in its AI and satellite internet businesses.
What Supermicro Announced
Supermicro announced that its revenue for the past quarter will range from $18.5 billion to $19.5 billion. Analysts had expected an average of about $15 billion, according to Bloomberg. Gross margin is expected to reach 12–12.5%.
An AI server manufacturer is benefiting from the rapid growth in demand for equipment used to train and run this technology. Supermicro servers are equipped with Nvidia chips, which have become the top choice for the vast majority of data centers working with AI.
Context
In recent weeks, AI companies’ stocks have come under pressure: investors are increasingly skeptical that the rapid growth in spending on computing infrastructure will continue at the same pace. The semiconductor index fell 11% in October and could post its worst monthly performance since July.
The sell-off has hit companies such as CoreWeave—which leases computing power to AI developers—particularly hard. From the beginning of the month through the close of trading on October 20, shares of CoreWeave—which finances infrastructure construction through bond issuances—fell 29%. Debt financing is increasingly being used to cover AI expenses, and the rise in U.S. Treasury yields this year has significantly increased its cost, Bloomberg notes.
This article was AI-translated and verified by a human editor
