Semiconductor Stocks
Super Micro Q2 2024 Earnings: The AI Bullet Train
Supermicro has produced a neck-breaking 1-month return of 84% in four weeks, if we assume it opens at $547 tomorrow. This is exceptional as QQQs are only up 4%. As a reminder, it’s been one of the best performing stocks for two years in a row. Supermicro personifies the saying “winners keep winning.” Last quarter, we had stated that Super Micro’s guidance appeared to be conservative: “By far, the most important question on the call was if management was being conservative in their fiscal year guide OR are there challenges ahead for the March and June quarter? Management provided a straightforward answer that Q4 and the fiscal year guides are conservative, implying that we have chance for a beat again in the near-term.” The word “conservative” was used again, and an analyst attempted to model how SMCI could exit the year. If the analyst is correct, then there’s roughly 60% room in the stock’s valuation. Each investor will need to decide for themselves how to interpret the Q&A. However, that was my takeaway and it’s likely we take a shot at adding to our position tomorrow. Before I get too caught up in describing the revenue beat, I do want to say that cash was a blemish for this report and it’s important to file a note that cash flow needs to be watched. We detail this below under the Cash section.
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