Super Micro climbs after upbeat forecast shows robust AI demand

Oct 21 — Super Micro Computer jumped more than 11% on Wednesday after it ​forecast quarterly revenue and profit margin comfortably above Wall Street estimates, signaling that AI data center demand remains ‌resilient.

Shares of the AI server maker rose 11.6% to $36.25, hitting a one-week high.

Here ⁠are more details:

• Super Micro ​forecast first-quarter revenue between $18.5 billion ⁠and $19.5 billion, above analysts' expectations of $15.23 billion, according to ‌data compiled by LSEG

• ‌It now expects profit margins in the range of ⁠12% to 12.5% versus earlier ⁠expectations of between 10.4% and 10.8%

• The ongoing scramble to build data centers has largely benefited semiconductor and AI server makers, including Super Micro

• Microsoft, Google, Amazon and Meta are expected to spend more than $700 billion on AI ‌infrastructure this year

• Other server makers Dell ​and Hewlett Packard Enterprise also gained 5.1% and 3.2%, respectively

• "Investors are likely to focus on whether strong performance in core businesses can continue to support elevated AI investment," said strategists at UBS Global Wealth Management

• The brokerage added that commentary from AI giants on spending, margins and returns ​will be scrutinized to determine whether the AI capex cycle can ‌be justified

• Markets ‌have ⁠lately been concerned about the profitability of data center operators, which have been issuing debt to fund their buildout at a time when borrowing costs are rising

• CoreWeave, a heavily indebted data ‌center operator, was at ​the center of a selloff ‌last week that also ⁠rattled AI-linked ​stocks

(Reporting by Purvi Agarwal and Avinash P in Bengaluru; Editing by ​Leroy Leo)

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