This Stock-Split Stock Could Soar If Nvidia Delivers a Blowout Q2 Update

These two AI stocks are practically joined at the hip.

| More on:
Data center woman holding laptop

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Which company is the center of attention this week? It’s Nvidia (NASDAQ: NVDA), hands down. The chipmaker is set to announce its second-quarter earnings results any moment now.

I fully expect Nvidia’s numbers to delight investors again, enabling it to extend its already impressive gains this year. But there’s another stock-split stock that could also soar if Nvidia delivers a blowout Q2 update.

Joined at the hip

Super Micro Computer (NASDAQ: SMCI), also called Supermicro, is arguably joined at the hip with Nvidia. The company provides server and storage solutions that are especially popular in data centers.

The same artificial intelligence (AI) tailwind fueling Nvidia’s growth also helps Supermicro. Charles Liang, Supermicro’s president and CEO, said earlier this month that his company “continues to experience record demand of new AI infrastructures.” As a result, Supermicro’s revenue in the fourth quarter of its fiscal 2024 soared 110% year over year.

If Nvidia handily beats expectations with its Q2 results on Wednesday (and, more importantly, if the company’s guidance is strong), it will bode well for Supermicro’s fortunes over the near term. I look for Nvidia to also provide some clarity on the timing of when chips based on its new Blackwell architecture will begin shipping. This should also help Supermicro, which has liquid-cooled AI superclusters ready to support Blackwell.

Sure, Liang maintains that a delay for Blackwell won’t impact Supermicro much because it does business with other chipmakers. Make no mistake about it, though: Good news from Nvidia will translate to good news for Supermicro.

Will Supermicro’s stock split provide another catalyst?

I don’t think there’s much doubt that a blow-out Nvidia Q2 update would provide a catalyst for Supermicro. But what about the company’s 10-for-1 stock split scheduled for Oct. 1? It’s iffy, in my view.

For one thing, Supermicro’s stock split won’t change anything at all about the company’s underlying business or its growth prospects. On the other hand, spectacular guidance from Nvidia would likely mean stronger growth ahead for Supermicro.

Any investor who really wanted to buy shares of Supermicro could do so even with its share price trading in the ballpark of $600. Many online brokerages support buying fractional shares.

However, this will be Supermicro’s first stock split. I’ll admit that it’s possible some investors who have remained on the sidelines could view the split as a great opportunity to buy the stock. I suspect the allure to invest in Supermicro could be even greater if the stock indeed soars as I expect it will following Nvidia’s quarterly update this week.

Is Supermicro a better stock to buy than Nvidia?

Now for an even more important question: Is Supermicro a better stock to buy than Nvidia? Wall Street seems to think so.

The consensus 12-month price target for Supermicro of analysts surveyed by LSEG in August reflects an upside potential of over 50%. By comparison, the average price target for Nvidia is slightly lower than its current price.

I agree that Supermicro is a better pick than Nvidia. My primary reasoning is valuation. Supermicro’s shares trade at a much lower forward earnings multiple than Nvidia’s. But if Nvidia gives great news to investors on Wednesday, both of these stocks should be big winners.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Nvidia wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

e-commerce shopping getting a package
Tech Stocks

Should You Buy Shopify Stock While It’s Below $120?

Shopify stock has had a strong growth story, but it probably isn't over yet.

Read more »

cloud computing
Tech Stocks

How I’d Allocate $1,000 in Tech Stocks in Today’s Market

Investing regularly in undervalued tech stocks such as RingCentral should help you derive outsized gains in 2025 and beyond.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »