Super Micro climbs after upbeat forecast shows robust AI demand

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

Oct 21 : Super Micro Computer jumped nearly 13 per cent on Wednesday after it forecast quarterly revenue and profit margin comfortably above Wall Street estimates, signaling that AI data center demand remains resilient.

Shares of the AI server maker rose 12.7 per cent to $36.69 in premarket trading.

Here are more details:

• Super Micro forecast first-quarter revenue between $18.5 billion and $19.5 billion, above analysts' expectations of $15.23 billion, according to data compiled by LSEG

CNA Games

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can
Show More
Show Less

• It now expects profit margins in the range of 12 per cent to 12.5 per cent versus earlier expectations of between 10.4 per cent and 10.8 per cent

• The ongoing scramble to build data centers has largely benefited semiconductor and AI server makers, including Super Micro

• Microsoft, Google, Amazon and Meta are expected to spend more than $700 billion on AI infrastructure this year

• Other server makers Dell and Hewlett Packard Enterprise also gained over 4 per cent each before the bell

• "Investors are likely to focus on whether strong performance in core businesses can continue to support elevated AI investment," said strategists at UBS Global Wealth Management

• The brokerage added that commentary from AI giants on spending, margins and returns will be scrutinized to determine whether the AI capex cycle can be justified

• Markets have lately been concerned about the profitability of data center operators, which have been issuing debt to fund their buildout at a time when borrowing costs are rising

• CoreWeave, a heavily indebted data center operator, was at the center of a selloff last week that also rattled AI-linked stocks

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here