Three of the biggest names in logic chips closed higher on August 12, following a strong earnings report deep in the AI server supply chain. Advanced Micro Devices, Inc. (NASDAQ:AMD) up 1.8% at $483, Intel Corporation (NASDAQ:INTC) up 3.3% to $101, and NVIDIA Corporation (NASDAQ:NVDA) up 3% to $224, in a broad rally sparked not by news from any of the three companies, but by Super Micro Computer Inc. (NASDAQ:SMCI), whose results reinforced how strong AI infrastructure expenditure remains.
Blowout Order Book Validates AI Infrastructure Demand
On August 11, Super Micro Computer Inc. (NASDAQ:SMCI) released its fiscal fourth-quarter report, and the results were impressive on two fronts. Non-GAAP earnings per share came in at $1.70, up 139% from the roughly $0.71 analysts projected, though revenue of $11.12 billion fell just short of expectations. The major story, however, was the order book: Super Micro reported more than $60 billion in new orders received during the quarter alone, up more than 50% compared to the $39 billion the company reported just six weeks prior.
The margin story was equally as important as order growth. Super Micro’s non-GAAP gross margin increased to 17.6%, more than doubling the previously forecast 8.2%-8.4% range, which management put down to a better mix of customers and products.
NVIDIA, AMD, and Intel Benefit in Different Ways
That’s why the rise extended far beyond Super Micro’s own shares. For NVIDIA Corporation (NASDAQ:NVDA), whose GPUs power the servers Super Micro builds, the order surge acts as an independent data point confirming that demand for its chips continues to be strong ahead of its own upcoming fiscal second-quarter report, which includes revenue projections of roughly $91 billion excluding China data-center compute. NVIDIA enters that report up 19.23% year-to-date, has a $80 billion share buyback authorization, and recently announced a $500 billion financing arrangement with a broad collection of Wall Street banks.
Advanced Micro Devices, Inc. (NASDAQ:AMD), which is up a staggering 130.08% year to date, has its own reasons to gain something from the read-through. The company has been securing major GPU deployment orders, including contracts for up to 2 gigawatts of its MI450 accelerators for Anthropic, establishing itself as the most credible competitor to NVIDIA in AI data center silicon. A robust server-supply-chain signal, such as Super Micro’s, lends credibility to the broader notion that there is enough demand for AI infrastructure to support several chip suppliers.
Meanwhile, Intel’s participation in the rally highlights a different dynamic. Rather than competing directly for AI training workloads, Intel Corporation (NASDAQ:INTC) could benefit through its role as a key CPU supplier to AI server systems: its server CPUs, especially the Xeon series, function as host processors integrated within the massive GPU systems that companies like Super Micro design and sell. A rise in Super Micro’s order book indicates that Intel’s estimated CPU attach volume will increase, even if Intel does not win any AI-specific silicon contracts.
Hedge Fund Sentiment
Institutional positioning in Super Micro Computer Inc. (NASDAQ:SMCI) showed increased smart-money interest prior to the print. According to Insider Monkey’s filing data, hedge fund ownership increased from 39 funds in Q4 to 49 funds in Q1. Marshall Wace LLP, which owns a $163.67 million position in the server provider, is among the most notable institutional investors.
Insider Monkey’s Bottom Line
The bigger concern for the rise is whether it will hold up once NVIDIA Corporation (NASDAQ:NVDA) reports. Super Micro’s order spike raises the bar for what the market now anticipates, and if NVIDIA’s own outlook indicates a slowing AI infrastructure demand or a slower Blackwell-generation ramp, the gains on August 12 could quickly reverse throughout the group. For the time being, however, the message from within the AI supply chain was clear enough to boost three very different chip companies on the same afternoon: the investment cycle appears to be intact, at least for another quarter.
While we acknowledge the risk and potential of SMCI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SMCI and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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