AI Stocks in Focus: Super Micro Computer Among the Trendsetters

As the earnings season progresses, investors are eager to see how investments in Artificial Intelligence (AI) are paying off for S&P 500 companies. Analysts anticipate a slowdown in earnings growth, with S&P 500 profits expected to increase by 5.3% compared to the same period last year, following a 13.2% rise in the second quarter, according to an analysis by Reuters. The technology and communication services sectors, in particular, are expected to see significant year-over-year gains: earnings growth for the technology sector is projected at 15.4%, and for communication services at 12.3%. AI-related companies have long been a focal point of earnings reports, contributing significantly to market gains. The S&P 500 has reached highs with a year-to-date increase of about 21%, driven by the impressive performance of the technology and communications sectors. Howard Chan, CEO of Kurv Investment Management, emphasized that analysts are closely watching how large companies monetize their AI initiatives. Companies like Meta experienced significant share price increases after projecting strong revenue growth, suggesting that revenues from digital ads are effectively funding their AI investments. However, substantial spending by companies such as Google in the AI sector has raised questions about integration into existing business models. The S&P 500 is currently trading at 22.3 times estimated future 12-month earnings, surpassing the long-term average of 15.7. Many investors hope that third-quarter results could justify the higher stock valuations, particularly as the semiconductor sector continues to be a focal point of AI investments. Super Micro Computer ranks 27th on the list of the most sought-after AI stocks. The company develops and manufactures high-performance server and storage solutions based on modular and open architectures. Recently, a new line of servers was announced, based on the AMD EPYC 9005 series and equipped with AMD Instinct MI325X GPUs. This H14 product line includes a variety of high-performance systems, including AI inference GPUs, and is available with air or liquid cooling. The architecture offers a 17% better instruction rate per clock cycle than the previous generation, further improving performance per core.