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Stocks Grow as Yields Ease, Ahead of NVIDIA Earnings

August 23, 2023 / By /

The stock market grew on Wednesday ahead of NVIDIA’s (NVDA) earnings, which beat estimates. In addition, a decline in yields also boosted investors’ sentiment. The 10-year Treasury yield eased back from its highest level and settled at 4.21% today.

Overall, S&P 500 increased 1.1% to 4,436, while NASDAQ rose 1.6% to 13,721.

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Here is the one-year chart of Supermicro Computer (SMCI) as of August 17, 2023, when the stock was at $244.

Supermicro Computer is a Silicon Valley-based manufacturer of server and storage systems for enterprise data centers, cloud computing, artificial intelligence (AI), 5G, and edge computing. It is the only US-based large scale AI platform designer and manufacturer.

Supermicro Computer is experiencing huge growth with its AI rack-scale solutions which now represents more than half of the company’s revenues. AI platforms and plug-and-play rack products now comprise 52% of total revenues, compared to just 29% during Q2 of 2023. The company is seeing strong demand for its Delta Next systems, which utilize the NVIDIA H100 GPU. It also recently invented a 4,000 racks per month production facility in Silicon Valley that is pushing out AI racks quickly with both air-cooled and liquid-cooled options. Supermicro Computer has record-high backorders and many new customers. However, management said that shipments will still be constrained by supply chain bottlenecks in key components.

David Sharek

The spending on AI includes both high speed processors from NVIDIA and infrastructure to house it and keep it cool, which is Supermicro Computers.

– David Sharek, Founder of School of Hard Stocks

SMCI is a top two holding in our Growth Portfolio and Aggressive Growth Portfolio. The stock just corrected after a parabolic run, but the numbers still look great so David Sharek will take this dip as a buying opportunity.

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