The surge of artificial intelligence has brought about a revolution across numerous industries, notably impacting the stock market, and companies closely involved in AI, such as semiconductor manufacturers and component producers.
Among these, Super Micro Inc (NASDAQ: SMCI), and Advanced Micro Devices (NASDAQ: AMD) emerge as significant players in the industry.
Finbold has undertaken a thorough analysis of their technical aspects, fundamentals, and other critical factors to determine which one presents a more promising investment opportunity.
SMCI stock’s case
Super Micro Computer, commonly known as Supermicro, specializes in selling AI server solutions, such as rackmounts, designed for deploying AI chips. These solutions are customized and modular, enabling the mounting of AI chips from leading manufacturers like Nvidia (NASDAQ: NVDA), Intel (NASDAQ: INTC), and AMD. Not surprisingly, as demand for AI server chips has surged, sales of Supermicro’s offerings have soared.
In its fiscal 2024 second quarter, which concluded on December 31, the company’s revenue surged impressively by 103% year over year, reaching $3.66 billion. Moreover, its adjusted earnings saw a significant increase from $3.26 per share in the same quarter of the previous year to $5.59 per share, this resulted in SMCI’s inclusion in the S&P 500 at the start of this month, further testifying to its stellar performance.
With the strong financial backing, technical indicators should fall in line, however, this is not the case with the SMCI stock, at least not currently.
Technical analysis suggests that SMCI stock is poised to maintain its upward trend in the near future. However, with momentum indicators signaling overbought conditions, there’s a possibility of a short-term correction or consolidation before the uptrend resumes.
Despite this, the overall outlook remains bullish, with potential for a brief pullback.
AMD stock’s financial and technical arguments
As a major player in the AI industry, and its offering of microchips that specialize in delivering the best performances for AI-based operations, AMD projects revenue of at least $3.5 billion from AI chip sales in 2024.
This marks a substantial increase from the company’s previous estimate of $2 billion for the year. The upward revision comes in response to the positive reception received by AMD’s MI300 Instinct accelerators, released in December, indicating strong demand among buyers.
Additionally, AMD’s growth is forecasted to accelerate further in 2025, with revenue expected to surge by 25% to reach $32.3 billion.
The technical analysis of AMD stock suggests a probable continuation of the upward trend in its price. The bullish momentum, backed by strong volume flow, paints a positive picture for AMD’s outlook.
Although there might be a short phase of consolidation or a slight pullback owing to decreasing volatility, the overall trajectory remains bullish.
The final verdict: Which AI stock is better?
While both stocks make strong cases for consideration, SMCI emerges as the clear winner due to its strong financials that trample AMD growth in the recent reports, with technical indicators projecting sustained upward movement over the long term.
However, one significant drawback that could sway investors toward AMD stock is its valuation. With SMCI currently priced at $1,068 and AMD at $191, the former may be perceived as too expensive, potentially offering a lower investment-to-return ratio, while AMD still offers an appealing entry point, with a potential of substantial future returns.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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