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SMART Global Holdings (SGH) Soared on Positive Earnings Results and Guidance

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. Strong economic signals and a positive inflation report lifted the market rally during the first quarter. The fund returned 6.25% during the quarter underperforming the 6.92% return of the Russell 2500 Index. However, the fund outperformed the 6.07% returns of the secondary benchmark the Russell 2500 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Meridian Contrarian Fund highlighted stocks like SMART Global Holdings, Inc. (NASDAQ:SGH), in the first quarter 2024 investor letter. SMART Global Holdings, Inc. (NASDAQ:SGH) is a memory-focused company, that designs and develops enterprise solutions. The one-month return of SMART Global Holdings, Inc. (NASDAQ:SGH) was 10.18%, and its shares lost 12.66% of their value over the last 52 weeks. On June 21, 2024, SMART Global Holdings, Inc. (NASDAQ:SGH) stock closed at $22.63 per share with a market capitalization of $1.183 billion.

Meridian Contrarian Fund stated the following regarding SMART Global Holdings, Inc. (NASDAQ:SGH) in its first quarter 2024 investor letter:

SMART Global Holdings, Inc. (NASDAQ:SGH) is a diversified technology company with leading market positions in memory, LEDs, high-performance computing (HPC), and the Internet of Things (IoT). Our interest was piqued when the company hit a rough patch in 2019-early 2020 as several factors led to an earnings decline. Volatility in its memory business caused by weakness in Brazil, new product investments the company had made ahead of revenue, and order delays in its HPC business all converged. While none of these developments are particularly unusual, it is uncommon for all three to turn negative at the same time. Our thesis was that the company’s impressive new management team could not only smooth out some of the volatility in the business but also drive growth through superior capital allocation and organic investment. With the stock trading at less than 8x earnings at the time of our investment (Q3 2020), we believed the risk/reward was excellent. The stock was strong in the quarter due to positive earnings results and guidance. The memory business appears to be in a cyclical upturn within a strong long-term secular growth trend driven by increased memory content in everything from phones to data center equipment to cars. Smart Global remains a leader in HPC implementation for AI, a market that remains strong, and there is anticipation that the company’s efforts to enhance its go-to-market strategy should gain traction. We believe the long-term risk/reward is still strong and maintain a large position in the stock, though we reduced our position during the quarter as part of our regular risk management process.”

An array of LED lights illuminating a video wall, showcasing the company’s capabilities.

SMART Global Holdings, Inc. (NASDAQ:SGH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held SMART Global Holdings, Inc. (NASDAQ:SGH) at the end of the first quarter which was 20 in the previous quarter. In the recent quarter, SMART Global Holdings, Inc. (NASDAQ:SGH) generated revenue of $285 million, which was in line with the midpoint of its guidance. While we acknowledge the potential of SMART Global Holdings, Inc. (NASDAQ:SGH) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We discussed SMART Global Holdings, Inc. (NASDAQ:SGH) in another article and shared ClearBridge Small Cap Value Strategy’s views on the company. SMART Global Holdings, Inc. (NASDAQ:SGH) was one of the detractors of the Meridian Contrarian Fund in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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Wall Street calls this $3 stock a “Melting Ice Cube.” They said the same thing about BTI before it returned 90%.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

My name is Inan Dogan. I’m the co-founder and Research Director of Insider Monkey. I have an important message for you today.

Since March 2017, my stock picks have returned 16.5% annually. Today, I’ve found an opportunity even bigger than my British American Tobacco call.

Two years ago, Wall Street wrote off British American Tobacco (BTI) as a “melting ice cube.” The stock had crashed 40% from its peak, and consensus said the business was dying.

We looked under the cover and realized they were wrong.

We alerted our subscribers, and BTI returned 90% in just 16 months.

Now if you had invested just $10,000 in BTI in June 2024, you’d be sitting on $19,000 in October 2025.

Today, we have identified a nearly identical pattern in a digital-first giant trading at $3.

While the market panics over a surface-level revenue decline, our PhD-led research shows management has actually surgically cut $100 million in waste to focus on high-margin growth.

This pattern is a hallmark of our 16.5% annual return track record. The current opportunity offers a 400% upside potential—dwarfing even our 90% BTI return.

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