Super Micro Computer (NASDAQ: SMCI) experienced a significant increase in stock value during Friday’s trading session. The company’s stock rose by 10.9%, outpacing the broader market, with the S&P 500 index rising 1.2% and the Nasdaq Composite index up by 1.7%.
This upward momentum in Super Micro Computer (often referred to as Supermicro) can be attributed in part to positive AI spending forecasts from major players in the tech industry. While some analysts have speculated that the investment cycle for AI infrastructure may be slowing, Microsoft has announced substantial plans to ramp up its spending.
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Super Micro Computer Stock Soars Following Microsoft’s AI Budget Reveal
In a recent blog post, Microsoft Vice Chair and President Brad Smith shared that the company intends to allocate around $80 billion towards AI infrastructure this year. For context, Microsoft is projected to spend at least $53 billion on capital expenditures in 2024, primarily focused on expanding its data-center capabilities for AI.
This indicates at least a 51% increase in the company’s spending on AI hardware by 2025. The primary beneficiary of Microsoft’s expanded AI investment will likely be Nvidia, the leading manufacturer of graphics processing units (GPUs) essential for high-performance AI applications. However, this news also paints a positive picture for the overall AI hardware market.
Microsoft ranks as Nvidia’s largest customer, followed by Meta Platforms as the second-biggest buyer. Supermicro holds the position of the third-largest purchaser of Nvidia’s products, with its powerful GPUs integral to its advanced server solutions. The outlook for Supermicro remains optimistic as Microsoft’s plans to increase AI hardware investment suggest robust demand for AI servers in 2025.
The Future of Supermicro: What Lies Ahead?
In evaluating Super Micro Computer’s business outlook and stock potential, it’s clear that demand is not a concern. The company is valued at approximately 12 times its expected earnings this year and under 80% of projected sales, making it appear undervalued by conventional metrics. Nevertheless, uncertainty lingers regarding its stock performance.
Supermicro has not yet submitted its annual 10-K report for the 2024 fiscal year, which ended on June 30, 2024. Last October, the company’s financial auditor resigned due to issues of reliability concerning management statements and the independence of its audit committee. Following this, Supermicro appointed BDO as its new auditor and aims to file its 10-K by February 25. The stock may experience significant movements depending on whether it reports any substantial downward adjustments to previous financial statements.
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Randi Zuckerberg, former director of market development at Facebook and sister to Meta Platforms CEO Mark Zuckerberg, serves on The Motley Fool’s board. Keith Noonan does not hold positions in the mentioned stocks. The Motley Fool has investments in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool suggests the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. For more information, please review our disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
