Artificial intelligence (AI) has been the hottest trend on the market for the past couple of years, and it shows no signs of letting up. Unlike other trends that have stormed the markets in recent years, AI, specifically generative AI, has unlocked incredible value for users, both techies and laypeople.
Chipmaker Nvidia has gotten much of the attention — and stock gains to match. But other players are also reaping the benefits and have tons of potential. Consider Dell Technologies (NYSE: DELL) and Amazon (NASDAQ: AMZN). Which is the better AI stock to buy today?
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Keith Noonan: Dell has been posting strong growth thanks to big gains in the AI server market. While overall revenue rose 9% to $25 billion in its last reported quarter, revenue for its infrastructure solutions segment increased 38% to $11.6 billion. Within the segment, servers and networking revenue grew 80% to $7.7 billion. There’s likely plenty of growth still to come in the product category.
In addition to its own competitive strengths, Dell is poised to benefit from the missteps of one of its biggest competitors. Super Micro Computer (also known as Supermicro) had been the hottest player in the high-performance server market, but the company has suffered some seemingly self-inflicted setbacks.
Last month, Supermicro’s auditor stepped down and said it could no longer deal with the company because it couldn’t rely on management’s representations or the company’s financial statements. Supermicro had already delayed filing its annual 10-K report with the Securities and Exchange Commission (SEC) before its auditor resigned, and it subsequently delayed the filing of its 10-Q report for the first quarter of its current fiscal year.
Supermicro’s accounting issues have had a major impact on the company’s reputation and played a big role in tanking its stock. Its share price is down more than 60% during the past month alone. The stumbles also seem likely to have a significant impact on the server specialist’s business performance and competitive positioning.
In response to the controversy and uncertainty, reports emerged that Nvidia had begun diverting orders that would have gone to Super Micro Computer to other companies. Nvidia’s graphics processing units (GPUs) were the key hardware in Supermicro’s most advanced servers. Even more striking, Supermicro recently ranked as Nvidia’s third-largest customer.
