When it comes to investing in artificial intelligence (AI) stocks, two major players have emerged as potential contenders: Dell Technologies and Super Micro Computer. Both companies have seen significant upticks in their stock prices, indicating a growing interest in AI servers and infrastructure.
Dell Technologies, a leading global server market player, has experienced a steady rise in demand for AI-optimized servers. In the last quarter of fiscal 2024, Dell reported a 40% increase in orders for AI servers, amounting to $800 million in sales. With the global AI server market expected to reach $150 billion in revenue by 2027, Dell is poised for significant growth in this sector.
Super Micro Computer, though smaller in size compared to Dell, has also capitalized on the AI server market boom. Over 50% of its total revenue in the previous quarter came from AI-related server solutions. The company is on track to more than double its revenue to $14.5 billion in the current fiscal year, with a focus on expanding manufacturing operations to support increased demand.
While Dell boasts a larger market share and potential growth from AI-enabled PCs in the future, Super Micro Computer’s rapid growth and strong focus on AI servers are driving its earnings at an annual rate of 48% for the next five years. In comparison, Dell is expected to see negligible earnings growth during the same period.
Investors looking for a promising AI stock trading at an attractive valuation may find Dell appealing, as it currently trades at just 15.7 times forward earnings. However, growth-oriented investors may lean towards Super Micro Computer, given its faster growth trajectory and potential for higher returns in the long term.
In conclusion, both Dell Technologies and Super Micro Computer present unique opportunities in the AI server market, each with its own strengths and growth prospects. Investors should carefully assess their investment goals and risk tolerance before deciding which stock aligns best with their portfolio strategy.
