THE Nvidia (NASDAQ:NVDA) The heavyweight shows no signs of stopping as the semiconductor giant released a stunning new set of results for the first quarter of fiscal 2025 (for the three months ended April 28) on May 22, which easily crushed Wall Street’s expectations.
While Nvidia’s revenue jumped 262% year over year to $26 billion, its non-GAAP earnings soared 461% to $6.12 per share. Analysts would have been happy with earnings of $5.60 per share on revenue of $24.6 billion. Additionally, Nvidia expects second-quarter revenue of $28 billion, midway through its guidance range, which would be more than double the $13.5 billion revenue recorded during the period. from the previous year and well above the consensus estimate of $26.6 billion.
More benefits awaited Nvidia investors as the company increased its quarterly cash dividend by 150% and also highlighted that it would begin shipping its next-generation Blackwell chips sooner than expected. All of this indicates that Nvidia’s red-hot stock rally is here to stay. The stock has already surged 115% in 2024, and its latest results and forecasts point to more gains.
But if you’re one of those investors who missed the Nvidia gravy train and are hesitant to buy the stock now because of its high valuation – even though it can justify it – it would be a good idea to take a closer look Super microcomputer (NASDAQ:SMCI) And Snowflake (NYSE: SNOW). Let’s look at the reasons why.
1. Super microcomputer
Nvidia’s phenomenal results have given server maker Super Micro Computer a big boost. This is not surprising, as strong demand for Nvidia’s artificial intelligence (AI)-focused chips bodes well for Super Micro, whose server solutions are used to mount these chips in data centers.
Nvidia CFO Colette Kress noted during the latest earnings conference call that demand for its current and next-generation chips could outstrip supply by 2025. That’s good news for Super Micro , as it is expected to continue to see healthy demand for its AI-optimized servers. and maintain the tremendous growth it has recorded in recent quarters.
SMCI Earnings Data (Quarterly) by YCharts.
Super Micro’s revenue forecast of $14.9 billion for the current fiscal year would translate to a 110% increase from the previous year’s $7.1 billion. Likewise, its earnings expectation of $23.69 per share for fiscal 2024 would be double last year’s level of $11.81 per share. However, it won’t be surprising to see Super Micro growing at a faster rate than currently expected.
Indeed, the company has already unveiled server solutions for Nvidia’s Blackwell chips, which will begin shipping in the current quarter and ramp up as the year progresses. Reports suggest that Super Micro has already received huge orders for servers optimized for mounting Blackwell processors, and it could be expected to meet a quarter of the demand for servers built using the chips next generation from Nvidia.
It’s no surprise that Super Micro’s revenue and bottom line are expected to grow significantly over the next two fiscal years.
SMCI revenue estimates for next fiscal year data by YCharts.
Super Micro’s revenue is expected to quadruple in just three years (given that it generated $7.1 billion in revenue last fiscal year), while profits could grow 3.5 times by fiscal 2026 compared to $11.81 per share in fiscal 2023. More importantly, it’s not too late for investors to buy this AI stock as it trades at an attractive price of 4.4 times that of sales and 25 times that of forecast profits.
Nvidia, on the other hand, has a sales multiple of 33 and a forward earnings multiple of 43. Better yet, analysts expect Super Micro’s earnings to grow at an annual rate of 62% over the next five years, giving investors yet another good reason to accumulate this stock before it soars higher.
2. Snowflake
Snowflake may not be as popular an AI name as the other two companies discussed in this article. But the company, which provides a cloud-based platform that helps organizations store, organize, analyze and build applications using their proprietary data, believes AI could become its next big growth engine .
Snowflake stock is down more than 21% in 2024 thanks to poor guidance and a management transition announced in February. However, the company’s results for the first quarter of fiscal 2025 (for the three months ended April 30) suggest that AI could play an important role in future growth.
The company’s revenue increased 33% year over year to $829 million, well above the consensus estimate of $787 million. More importantly, the company’s second-quarter product revenue guidance of $805 million to $810 million was above the $793 million estimate and suggests a year-over-year increase by 26.5% at mid-term. The company also raised its full-year product revenue guidance to $3.3 billion from $3.25 billion.
Snowflake’s outstanding performance obligations, a metric that refers to the total value of a company’s contracts that have yet to be fulfilled, increased 46% year over year to $5 billion. This was faster than its revenue growth, indicating that the company is building a strong revenue pipeline for the future.
It appears that AI is playing a pivotal role in improving Snowflake’s growth prospects. CEO Sridhar Ramaswamy highlighted in the company’s press release: “Our AI products, now available to everyone, are attracting strong interest from customers. They will help our customers deliver effective and efficient AI-driven experiences faster than ever. »
It’s worth noting that Snowflake has been investing aggressively in AI infrastructure and is looking to rapidly deploy AI-focused products to help its customers get the most out of their data. The company has also partnered with Nvidia to help customers deploy custom AI models for various tasks, such as translation, summarization, sentiment analysis, content extraction from documents, and creating AI-based generative assistants.
Additionally, Snowflake is looking to strengthen its AI capabilities by acquiring TruEra, an observability platform that will allow companies to monitor and evaluate the performance of large language models (LLM) and machine learning models. Such measures should allow Snowflake to prepare for stronger long-term growth, as high-quality data is important for developing robust and generative AI applications.
As such, it won’t be surprising to see Snowflake’s stock gain momentum as its AI-focused moves begin to bear fruit. The stock currently trades at 17 times sales. Although it’s expensive, the sales multiple is lower than last year’s 24 and significantly cheaper than Nvidia’s. However, it could become more expensive in the future thanks to Snowflake’s growing AI capabilities, which is why it would be a good idea to buy it before it skyrockets.
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Harsh Chauhan has no position in any of the securities mentioned. The Motley Fool ranks and recommends Nvidia and Snowflake. The Motley Fool has a disclosure policy.
Did you miss the Nvidia train? 2 Artificial Intelligence (AI) Stocks to Buy Instead was originally published by The Motley Fool