There is no other artificial intelligence (AI) company that is so closely watched Nvidia (NASDAQ: NVDA) the past few years. Nvidia’s role in the AI story is so prominent that any announcement the company makes at this point has the power to influence the capital markets.
As the company’s upcoming launch of its new Blackwell graphics processing unit architecture (GPU) looms, all eyes are on Nvidia and its partner network. Super microcomputer (NASDAQ: SMCI) is a player that has directly benefited from Nvidia’s booming GPU business over the past two years.
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However, recent reports suggest that Nvidia may be reducing its dependence on Supermicro’s IT infrastructure and looking for partnerships elsewhere.
Let’s analyze the situation and assess what could influence Nvidia’s decisions. Additionally, I will explore how this news has affected Supermicro stock and what it could mean for investors in both the short and long term.
The launch of the Blackwell chips may be the most hyped AI event of 2024. Nvidia CEO Jensen Huang boasted that demand for the new chipsets is high.crazy.” In the meantime, Morgan StanleyBlackwell’s research team predicts $10 billion in revenue at Blackwell in the fourth quarter alone. While this is all good news on the surface, there are some wrinkles unfolding in the background that savvy investors should keep an eye on.
According to an article posted on DigitimesNvidia is said to be diverting Blackwell orders away from Supermicro in favor of other IT architecture specialists.
The past few months have been tough for Supermicro.
In August, Supermicro became the subject of a short report published by Hindenburg Research. Hindenburg claims that Supermicro’s accounting controls are weak, essentially implying that something fishy could be going on with its accounting and possibly the company’s financial prospects.
To be honest, I didn’t think much about Hindenburg’s accusations at the time. After all, short sellers have a vested interest in seeing a drop in share price – and that’s exactly what happened after the short report.
However, Supermicro postponed its annual report after the Hindenburg report. While this wasn’t the best look, I remained cautiously optimistic about Supermicro. But then, in late October, Supermicro filed an 8-K notifying investors that its accountant, the Big Four accounting firm Ernst & Young, had resigned.