This AI Stock Is 'Hotter Than Nvidia,' Says Veteran Investor

Super Micro Computer Inc SMCI has emerged as a top pick in the artificial intelligence (AI) hardware sector, overshadowing industry giant NVIDIA Corp NVDA, according to veteran investor Louis Navellier.

What Happened: Navellier, the founder and chairman of Navellier & Associates, has been a long-time investor in Super Micro Computer. He recently expressed his enthusiasm for the company’s performance, telling CNBC’s “Street Signs Asia” that Super Micro Computer is currently outshining Nvidia in the AI hardware market.

"Super Micro is hotter than Nvidia. And the reason they're hotter is they got it higher – they beat their guidance. And it's not in the S&P 500 right now. They'll probably be added," Navellier said.

Super Micro Computer, a Nasdaq-listed company specializing in AI systems and graphics processing unit servers, has seen its shares soar by over 200% this year, while Nvidia’s shares have risen by 59%.

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Navellier advises investors interested in the AI trend to consider hardware stocks, with Super Micro Computer and Nvidia being the dominant players. He also believes that Super Micro Computer’s stock is not overpriced, a sentiment echoed by Wall Street analysts.

Bank of America emphasized Super Micro Computer’s underutilized potential in mid-February, pointing out its expanding backlog and growing capacity. It has a price target of $1,040, which represents a 21% upside, and a buy rating. Super Micro Computer received a 71% buy recommendation from analysts covering the company, according to FactSet data.

Why It Matters: Navellier’s endorsement of Super Micro Computer comes at a time when the AI hardware market is experiencing significant shifts. Just days before Navellier’s comments, Nvidia identified Huawei Technologies as a major rival in the AI chip market. This acknowledgment of Huawei‘s growing influence in AI hardware, despite ongoing chip constraints, underscores the dynamic nature of the sector.

Navellier’s assessment of Super Micro Computer also contrasts with warnings from other industry figures about the sustainability of the current market rally. John Hussman, the president of the Hussman Investment Trust, has cautioned that the market’s “fear of missing out” FOMO rally could lead to a prolonged period of low returns, casting doubt on the long-term prospects of the AI-driven market surge.

Navellier’s endorsement of Super Micro Computer comes at a time when the tech industry is under scrutiny for potential overvaluation. The recent surge in tech stocks, particularly in the AI and hardware sectors, has raised concerns about a possible market bubble, with some analysts drawing parallels to the dot-com bubble of the early 2000s. Despite these concerns, Navellier’s confidence in Super Micro Computer suggests that there may still be solid investment opportunities in the tech sector.

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