We recently compiled a list of the 10 AI News and Ratings Making Waves on Wall Street. In this article, we are going to take a look at where Super Micro Computer, Inc. (NASDAQ:SMCI) stands against the other AI stocks.
US Energy Shortage Threatens AI Advancements
CNBC reported that the U.S. is facing a power capacity shortage as it races with China to lead in artificial intelligence, according to Caroline Golin, Google’s global head of energy market development. Speaking at a Nuclear Energy Institute conference, Golin highlighted the growing need for reliable energy to support AI advancements, with renewables causing grid instability and prompting the company to turn to nuclear power.
Last October, it partnered with Kairos Power to purchase 500 megawatts from small modular nuclear reactors, with the first reactor expected in 2030. Other Big Techs have also shown interest in nuclear energy, investing in projects to meet rising power demands. While nuclear is seen as a long-term solution, Golin emphasized the immediate need for more power to compete with China. President Trump declared a national energy emergency to fast-track power plant construction for AI data centers.
Stargate Project Aims to Strengthen US AI Leadership
While the energy needs look like a significant hurdle, the latest Stargate project is aiming to solve that problem. Reuters reported on February 6 that OpenAI announced it is assessing U.S. states for AI data center locations under the $500 billion Stargate project, aimed at strengthening the U.S. position in the global AI race against China. Chris Lehane, OpenAI’s chief global affairs officer, stressed the competition’s high stakes and noted that it could shape the future of democratic versus authoritarian AI. He commented:
“As news emerged about DeepSeek, it makes it clear this is a very real competition and the stakes could not be bigger… Whoever ends up prevailing in this competition is going to really shape what the world looks like going forward, whether we have democratic AI that’s free and open, or authoritarian AI that is autocratic.”
The initial Stargate data center is under construction in Abilene, Texas, with the potential for 5-10 campuses overall. However, China’s DeepSeek recently demonstrated that advanced AI models could be developed on less specialized, cheaper chips, challenging the assumption that large, costly data centers are necessary for AI progress, the report stated.
For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of technicians in a server room, testing and managing the newest server solutions.
Super Micro Computer, Inc. (NASDAQ:SMCI)
Number of Hedge Fund Holders: 33
Super Micro Computer, Inc. (NASDAQ:SMCI) develops and provides modular server and storage solutions, software, and support services for enterprise, cloud, AI, and 5G markets worldwide.
On February 11, Super Micro (NASDAQ:SMCI) announced preliminary FQ2 2025 results and provided an update on Supermicro’s fiscal 2025 progress. Projected net revenue is expected between $5.6 billion and $5.7 billion, a 54% year-over-year increase. The company expects continued growth fueled by AI demand and the transition to Blackwell GPUs. Preliminary non-GAAP earnings range from $0.58 to $0.60 per share, with margins affected by product mix and R&D investments.
Technology progress includes shipments of NVIDIA Blackwell products and expanded liquid-cooled data center solutions, which aim to lower costs and improve energy efficiency. Production capacity is increasing across Malaysia, Taiwan, Europe, and the U.S.
The management said that AI platforms contributed over 70% of Q2 revenue. Despite some margin pressure, cash flow remains managed, and cash ended at $1.4 billion. Adjustments were made to prior financial results without a restatement. Supermicro expects Q3 revenue between $5 billion and $6 billion, with updated fiscal 2025 revenue guidance at $23.5 billion to $25 billion. Completion of fiscal year 2024 filings is anticipated by the extended Nasdaq deadline.
Overall SMCI ranks 5th on our list of the AI stocks that are making waves on Wall Street. While we acknowledge the potential of SMCI 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 more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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