00:00 Speaker a
Another popular stock, we are looking at SMCI. Goldman Sachs sold its shares from neutral, saying they believe risk returns are unfavorable downside risks to valuations, competition and gross margins. You can see the stock of Supermicro computers fall by about 2%. Bucking, what we have seen in many of the broader trends in technology and chip names, especially this morning’s turn to the upward trend. But, we just read notes together. Here we both have a few things that are pressure on gross margins, the idea of transitioning from a hopper to Blackwell Chip from Nvidia, which will cost them, which will hurt their profits. Yes, they still see a story about income, but in terms of the prospects for the stock, the price of that stock is already a bit like it in it.
01:19 Speaker b
That’s it, that’s your sneaky little phrase, Maddie isn’t enough. Let’s read its words. Goldman Sachs said that we expect SMCI to double its revenue in 2024 by the end of 2026. This is within two years, but it is still not enough. It feels like Nvidia’s story, right? Quarterly revenues were again and again, but the revenue outlook was not enough. It does feel like the expectation of game names throughout the chip space is another example.
02:21 Speaker a
Another good example when it comes to evaluating stocks is that it is actually about earnings growth. It’s like it always returns to revenue growth. We are talking about whether the CEO of SMCI (Accounting Issues) will continue to be CEO? All these back and forth, will they be eliminated? Ultimately, with our quick glance, there was no mention of Goldman Sachs (Accounting Issues). This is a growth story about the company moving forward.
03:03 Speaker b
And a lot of conversations about valuations relative to peers. An example is Dell, a comp, which keeps appearing in this report as we read, and basically says that SMCI is too expensive relative to Dell and some others. I know, I don’t think Dell is actually the cutting edge of some other names we think are. Therefore, the focus on fundamentals seems to be starting to work again.
