Market Reaction
Despite exceeding their quarterly earnings expectations on Tuesday evening, AMD AMD and Super Micro Computer’s SMCI stock plunged during yesterday’s trading session. Nevertheless, corrections can act as a tonic, and the remarkable ascents of +451% for Super Micro and +79% for AMD over the past year underscore their resilience.
The turbulence following the earnings calls has sparked interest among investors to ascertain whether the market overreacted. With SMCI rebounding and rising +3% on Thursday, coupled with AMD’s +1% uptick, the post-earnings dip presents an enticing opportunity.
Earnings Overview
Nvidia’s NVDA phenomenal growth in response to soaring demand for AI chips set high expectations for AMD’s Q1 report. Although earnings of $0.62 per share surpassed expectations of $0.60, such results were greeted with a mixed reception. Moreover, quarterly sales of $5.47 billion were slightly above estimates, showing a 2% uptrend from Q1 2023.
Super Micro, a purveyor of optimized server solutions, faced lofty projections owing to its stock’s remarkable surge mirroring Nvidia’s performance. While its Q3 earnings of $6.65 per share outperformed estimates by 15%, the sales figure of $3.85 billion missed expectations, albeit registering a 200% increase from the previous year.
Growth Trajectories
Zacks estimates anticipate a 30% increase in AMD’s annual earnings for fiscal 2024, with a subsequent 47% surge in FY25 to $5.06 per share. Sales projections reveal an 11% rise this year, poised to soar by 23% in FY25 to reach $30.97 billion.
Conversely, Super Micro is forecasted to witness an impressive 85% surge in annual earnings in FY24, with a projected EPS of $21.88 compared to $11.81 in 2023. Total sales are earmarked for a 103% escalation in FY24, foreseeing a further 35% jump to $19.5 billion in the subsequent year.
Investment Insight
The recent downturn in AMD and Super Micro Computer’s stock post-earnings may not have been an overreaction, underlining the dynamics of a volatile market. However, the promising growth trajectories of these companies continue to attract attention, with AMD holding a Zacks Rank #2 (Buy) and Super Micro securing a Zacks Rank #3 (Hold) post their significant rally.
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