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The AI Renaissance: Insights from 3 AI Juggernauts
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The AI Revolution
The technological revolution driven by Artificial Intelligence (AI) is here, promising to reshape our lives and propel AI-related stocks to unprecedented heights. According to a Bloomberg Intelligence report, the AI sector could achieve a staggering Compound Annual Growth Rate (CAGR) of 42% over the next decade. However, despite what analysts say, it is most important to watch what the actual leaders in the industry are saying. Today, we will dive into what three of Wall Street’s top AI juggernauts are saying on their earnings calls.
Zacks Rank #2 (Buy) stock Super Micro Computeris a leading global server solutions provider specializing in high-performance and energy-efficient hardware. The company designs and manufactures a wide range of server and storage solutions that cater to various computing needs. SMCI is a leader AI because its innovative and scalable hardware offerings are well-suited for the demanding computational requirements of artificial intelligence and machine learnings applications.
On the company’s recent conference call, CEO Charles Liang said, “I’m delighted to share our second quarter results, which show record-breaking performance for Super Micro. We achieved revenue of $3.66 billion, a 133% increase from last year, and earnings per share of $5.59. This is our first quarter ever with over $3 billion in revenue. More importantly, this single quarter’s revenue surpassed our annual revenue for 2021.”
Image Source: Zacks Investment Research
Takeaway: The last line of Liang’s statement really puts AI’s “hockey stick” growth into perspective.
Zacks Rank #3 (Hold) stock Advanced Micro Devices is a semiconductor firm that designs and produces high-performance computing and graphics solutions. AMD is an essential player in the AI industry due to its innovative graphics processing units (GPUs) and central processing units (CPUs) that excel in parallel processing tasks essential for artificial intelligence and machine learning workloads. AMD’s commitment to delivering competitive and energy-efficient solutions has contributed to its prominence in the AI market, where computational efficiency and performance are critical factors.
During last night’s conference call, AMD CEO Lisa Su explained, “We finished 2023 strong as data center sales accelerated significantly throughout the year, despite the mixed demand environment. As a result, we delivered record data center segment annual revenue and strong top-line growth in the fourth quarter, driven by the ramp of Instinct AI accelerators and robust demand for EPYC server CPUs across cloud, enterprise, and AI customers. Fourth quarter revenue increased 10% year-over-year to $6.2 billion, driven by a significant double-digit percentage growth in our data center and client segments. On a full-year basis, annual revenue declined 4% to $22.7 billion as record data center and embedded segment annual revenue was offset by lower client and gaming segment revenue.”
Image Source: Zacks Investment Research
Pictured: AMD revenue is expected to reaccelerate this year bolstered by AI.
Takeaway: AI and data center, the critical drivers for AMD, are growing like wildfire. Though the stock is selling off, the weakness can probably be chalked up to the fact that the stock is up more than 50% over the past three months.
Zacks Rank #3 (Hold) stock Microsoft is a multinational company known for its software, hardware, and cloud computing services. In the AI realm, Microsoft is the leader in generative AI. In fact, AI would likely not be on most investors’ radars if it wasn’t for Microsoft and OpenAI’s wild success with their popular ChatGPT Chatbot.
Across all segments, Microsoft is firing on all cylinders and currently holds the title for the largest market capitalization globally at over $3 trillion. The critical takeaway came from Chief Financial Officer Amy Hood, who said, “The important part is to invest toward the thing that’s going to shape the next decade and continue to stay focused on being able to deliver your day-to-day commitments. Microsoft is shifting to an AI-first position.”
Takeaway: Hood’s statements show how bullish companies are on the future of AI. Although AI comprises only a sliver of Microsoft’s massive earnings, it is the nonetheless the focus of the company.
Bottom Line
Examining insights from top AI players, Super Micro Computer, Advanced Micro Devices, and Microsoft tells us that the AI revolution is alive and well. For more evidence, watch how other AI leaders like Arista Networks ((ANET - Free Report) ) and Nvidia ((NVDA - Free Report) ) report.
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The AI Renaissance: Insights from 3 AI Juggernauts
The AI Revolution
The technological revolution driven by Artificial Intelligence (AI) is here, promising to reshape our lives and propel AI-related stocks to unprecedented heights. According to a Bloomberg Intelligence report, the AI sector could achieve a staggering Compound Annual Growth Rate (CAGR) of 42% over the next decade. However, despite what analysts say, it is most important to watch what the actual leaders in the industry are saying. Today, we will dive into what three of Wall Street’s top AI juggernauts are saying on their earnings calls.
Major AI Players Report EPS: Key Takeaways
Super Micro Computer ((SMCI - Free Report) ) – Hardware & Servers
Zacks Rank #2 (Buy) stock Super Micro Computeris a leading global server solutions provider specializing in high-performance and energy-efficient hardware. The company designs and manufactures a wide range of server and storage solutions that cater to various computing needs. SMCI is a leader AI because its innovative and scalable hardware offerings are well-suited for the demanding computational requirements of artificial intelligence and machine learnings applications.
On the company’s recent conference call, CEO Charles Liang said, “I’m delighted to share our second quarter results, which show record-breaking performance for Super Micro. We achieved revenue of $3.66 billion, a 133% increase from last year, and earnings per share of $5.59. This is our first quarter ever with over $3 billion in revenue. More importantly, this single quarter’s revenue surpassed our annual revenue for 2021.”
Image Source: Zacks Investment Research
Takeaway: The last line of Liang’s statement really puts AI’s “hockey stick” growth into perspective.
Advanced Micro Devices ((AMD - Free Report) ) – Semiconductors & High-Performance Computing and Graphics Solutions
Zacks Rank #3 (Hold) stock Advanced Micro Devices is a semiconductor firm that designs and produces high-performance computing and graphics solutions. AMD is an essential player in the AI industry due to its innovative graphics processing units (GPUs) and central processing units (CPUs) that excel in parallel processing tasks essential for artificial intelligence and machine learning workloads. AMD’s commitment to delivering competitive and energy-efficient solutions has contributed to its prominence in the AI market, where computational efficiency and performance are critical factors.
During last night’s conference call, AMD CEO Lisa Su explained, “We finished 2023 strong as data center sales accelerated significantly throughout the year, despite the mixed demand environment. As a result, we delivered record data center segment annual revenue and strong top-line growth in the fourth quarter, driven by the ramp of Instinct AI accelerators and robust demand for EPYC server CPUs across cloud, enterprise, and AI customers. Fourth quarter revenue increased 10% year-over-year to $6.2 billion, driven by a significant double-digit percentage growth in our data center and client segments. On a full-year basis, annual revenue declined 4% to $22.7 billion as record data center and embedded segment annual revenue was offset by lower client and gaming segment revenue.”
Image Source: Zacks Investment Research
Pictured: AMD revenue is expected to reaccelerate this year bolstered by AI.
Takeaway: AI and data center, the critical drivers for AMD, are growing like wildfire. Though the stock is selling off, the weakness can probably be chalked up to the fact that the stock is up more than 50% over the past three months.
Microsoft ((MSFT - Free Report) )
Zacks Rank #3 (Hold) stock Microsoft is a multinational company known for its software, hardware, and cloud computing services. In the AI realm, Microsoft is the leader in generative AI. In fact, AI would likely not be on most investors’ radars if it wasn’t for Microsoft and OpenAI’s wild success with their popular ChatGPT Chatbot.
Across all segments, Microsoft is firing on all cylinders and currently holds the title for the largest market capitalization globally at over $3 trillion. The critical takeaway came from Chief Financial Officer Amy Hood, who said, “The important part is to invest toward the thing that’s going to shape the next decade and continue to stay focused on being able to deliver your day-to-day commitments. Microsoft is shifting to an AI-first position.”
Takeaway: Hood’s statements show how bullish companies are on the future of AI. Although AI comprises only a sliver of Microsoft’s massive earnings, it is the nonetheless the focus of the company.
Bottom Line
Examining insights from top AI players, Super Micro Computer, Advanced Micro Devices, and Microsoft tells us that the AI revolution is alive and well. For more evidence, watch how other AI leaders like Arista Networks ((ANET - Free Report) ) and Nvidia ((NVDA - Free Report) ) report.