CryptoCurrency
Should You Buy Them Today?
Investors love a good stock split. There’s something about seeing a lower number for a top company’s stock that can make it feel like a bargain. While the lower price is somewhat of an illusion, since it’s an equally smaller piece of the pie, stock splits do typically indicate a great stock. When a price gets so high that it can make the stock look inaccessible, there’s usually an excellent company behind it, and the market is recognizing that.
Super Micro Computer (NASDAQ: SMCI) and Chipotle Mexican Grill (NYSE: CMG) are two incredible stock-split stocks that have made investors rich over time. Should you still buy them today?
Up 15% since its stock split, can Super Micro Computer still be a winner?
Keith Noonan: Super Micro Computer has become a battleground stock in the artificial intelligence (AI) space. While the company’s sales and earnings have been skyrocketing thanks to AI spurring demand for the company’s high-performance rack servers, some investors are betting that the momentum will be relatively short-lived. Making matters even more complex, the company delayed its 10-K filing shortly after the publication of a bearish report from short-seller Hindenburg Research.
Super Micro Computer completed its 10-for-1 stock split on Oct. 1, and the company’s share price is now up roughly 15% from its pre-split closing price. On the other hand, the share price is still down roughly 60% from the high that it reached in March.
Some bears have raised the argument that Supermicro’s core business revolves around putting off-the-shelf parts together — and that its margins will continue to deteriorate because the core components of its server systems are not proprietary. Graphics processing units (GPUs) from Nvidia and hardware from other companies are central to the value proposition of Supermicro’s rack servers, and the company’s gross margins could face pressure if players in the AI space have other options for securing processing and networking technologies.
In order to differentiate its servers, Supermicro has been looking to its liquid-cooling technologies. The company has recently delivered some good news on that front. In fact, most of Supermicro’s post-split stock gains have been powered by the news that the company has now shipped over 100,000 GPUs fitted with its proprietary liquid-cooling technologies.
Even after the recent gains, Supermicro stock is still valued at just 14 times this year’s expected earnings. On the heels of explosive sales and earnings growth last year, the company’s relatively low forward earnings multiple reflects market sentiment that’s doubtful about the business’s ability to weather cyclical downturns. But the stock could deliver big returns if the AI investment cycle is at an earlier stage than some are predicting.
For risk-tolerant investors looking for AI stock plays with potentially explosive upside, Super Micro Computer could have the makings of a worthwhile portfolio addition.
Chipotle Mexican Grill: Up 6,460%
Jennifer Saibil: Investors love Chipotle stock. The company is the leader in fast-casual dining, and it’s been reliable for growth and profits for years. It sailed through the pandemic with barely an impact, and it’s floating through inflation similarly.
Chipotle’s fresh, healthy fare at an affordable price point is resonating with its target affluent market, and it has raised prices to offset rising costs without curbing demand. Sales increased 18.2% year over year in the 2024 second quarter, driven by an 11.1% in comparable sales, and earnings per share (EPS) rose from $0.25 to $0.33. Operating margin expanded from 17.2% to 19.7%.
Chipotle split its stock in June in a 50-for-1 split, one of the largest ever on the New York Stock Exchange. The stock price had climbed well into the four digits before the split, which is its first, and it had increased since going public in 2006.
Stocks usually pick up steam heading toward a split as investors get excited, and they sometimes lose some of it after the split before picking up again. However, Chipotle has had some other recent news that the market didn’t like very much, and that’s the departure of its superstar CEO, Brian Niccol.
Chipotle wasn’t always a golden stock, and it was experiencing some serious problems before Niccol came on board in 2017. Investors view him as a savior of sorts, redeeming Yum! Brands‘ Taco Bell before achieving the same kind of turnaround at Chipotle. That’s why he’s now been nabbed by Starbucks, which is in desperate need of its own turnaround.
That news followed the announcement that longtime CFO Jack Hartung is retiring, leaving a management void, and it’s not hard to see why the market reacted negatively.
But all is not lost. COO Scott Boatwright moved up to become interim CEO, and Hartung is staying on while the company figures out its next steps. Even if Niccol were largely responsible for creating the branding and processes that have brought Chipotle to where it is today, they aren’t going anywhere.
Management still sees the potential to nearly double the North American store count to 7,000, and it’s also expanding internationally. Chipotle just opened up its first store in Dubai through a recent franchise partnership.
Chipotle has a working formula and plenty of expansion opportunities, and investors can still buy into its growth story.
Should you invest $1,000 in Super Micro Computer right now?
Before you buy stock in Super Micro Computer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Super Micro Computer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,069!*
Stock Advisor 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. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 7, 2024
Jennifer Saibil has no position in any of the stocks mentioned. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Nvidia, and Starbucks. The Motley Fool recommends the following options: short December 2024 $54 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
2 Stock-Split Stocks That Have Increased 5,000% to 6,390%: Should You Buy Them Today? was originally published by The Motley Fool
CryptoCurrency
Time to Hit Buy on These 2 Software Stocks, Says Daniel Ives
It’s no secret that tech stocks have been powering the market gains over the past few years, and software stocks were among the biggest drivers of this growth.
Multiple factors are propelling the software industry forward, such as the rapid advancement of AI technology, high demand for IT solutions, and the ongoing expansion of the global digital economy.
Wedbush tech expert Daniel Ives has been watching the tech industry, and his take on it points to continued strength supported by AI and cloud expansion.
“Solid enterprise spending, digital advertising rebound, and the AI Revolution will drive tech stocks higher into year-end in our view,” Ives opined. “We believe 70% of global workloads will be on the cloud by the end of 2025, up from less than 50% today.”
Keeping that in mind, Ives goes on to add that the time has come to hit buy on two software stocks. They may not be household names, but according to the TipRanks data, both stocks are Buy-rated – and Ives sees significantly more upside to each than the consensus on the Street. Let’s take a closer look.
Couchbase (BASE)
We’ll start with Couchbase, a modern database platform provider that offers users and developers everything they need to support a wide range of applications – from cloud, to edge, to AI. Couchbase bills itself as a one-stop-shop for data developers and architects, making its services available through its powerful database-as-a-service platform, Capella. Organizations using the service can quickly create applications and services that deliver premium customer experiences, giving top-end performance at affordable prices.
The Capella platform brings the popular as-a-service subscription model to the database industry. The company can support database services for a wide range of AI applications, including the latest gen-AI tech, as well as database search, mobile access, and analytic functions. Customers can also choose self-managed services through Couchbase’s servers, with on-premises management for both multicloud and community apps.
Couchbase’s database service has found success in a wide range of fields, including the gaming, healthcare, entertainment, retail, travel, and utility sectors. The company’s customer base includes such major names as Verizon, UPS, Walmart, Cisco, Comcast, GE, and PayPal.
Turning to the financial results, we see that Couchbase reported its fiscal 2Q25 figures at the start of last month. The top line of $51.6 million was up almost 20% year-over-year and came in just over the forecast, beating expectations by nearly a half-million dollars. At the bottom line, the company ran a net loss of 6 cents per share in non-GAAP measures, but that was 3 cents per share better than had been anticipated.
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1 Top Stock to Buy Hand Over Fist Before That Happens
2024 is turning out to be a solid year for the global semiconductor industry, driven by multiple catalysts. These include the booming demand for chips that can manage artificial intelligence (AI) workloads, a turnaround in the smartphone market’s fortunes, and a recovery in the personal computer (PC) market.
These factors explain why the global semiconductor industry’s revenue is expected to jump 16% in 2024 to $611.2 billion, according to World Semiconductor Trade Statistics (WSTS). That points toward a nice turnaround from last year, when the semiconductor industry’s revenue fell 8%. Even better, the semiconductor space is expected to keep growing in 2025 as well, with WSTS projecting a 12.5% increase in the industry’s earnings to $687.4 billion next year.
More specifically, WSTS predicts a whopping 25% increase in the memory market’s revenue in 2025 to $204.3 billion. As it turns out, memory is expected to be the fastest-growing semiconductor segment next year as well, following an estimated jump of almost 77% in this segment’s revenue in 2024.
There’s one company that could help investors tap this fast-growing niche of the semiconductor market next year: Micron Technology (NASDAQ: MU). Let’s look at the reasons why buying this semiconductor stock could turn out to be a smart move right now.
WSTS isn’t the only forecaster expecting the memory market to surge higher next year. Market research firm TrendForce estimates that the sales of dynamic random access memory (DRAM) could jump 51% in 2025, while the NAND flash storage market could clock 29% growth. Both these markets are expected to reach record highs next year.
The growth in these memory markets will be driven by a combination of strong demand and improved pricing. TrendForce is forecasting a 35% year-over-year increase in DRAM prices next year, driven by the increasing demand for high-bandwidth memory (HBM) that’s used in AI processors, as well as the growth in DRAM deployed in servers. Meanwhile, the growing demand for enterprise-class solid-state drives (SSDs) and the growth in smartphone storage will be tailwinds for the NAND flash market.
These positive trends explain why Micron is set to begin its new fiscal year on a bright note. The company’s revenue in fiscal 2024 (which ended on Aug. 29) increased 61% year over year to $25.1 billion. The company posted a non-GAAP (generally accepted accounting principles) profit of $1.30 per share, compared to a loss of $4.45 per share in fiscal 2023, driven by a big jump in its operating margin on account of recovering memory prices.
CryptoCurrency
A truly decentralized system would decentralize authority — Cardano exec
Cardano Foundation chief technology officer Giorgio Zinetti told Cointelegraph that centralized authority is good for speed, but decentralized governance would give long-term sustainability.
CryptoCurrency
Intel’s former CEO tried to buy Nvidia almost 2 decades ago
Tech pioneer Intel (INTC) has seemingly missed out on the artificial intelligence boom — and part of it can reportedly be traced back to a decision not to buy the chipmaker at the center of it all almost two decades ago.
Intel’s former chief executive Paul Otellini wanted to buy Nvidia in 2005 when the chipmaker was mostly known for making computer graphics chips, which some executives thought had potential for data centers, The New York Times (NYT) reported, citing unnamed people familiar with the matter. However, Intel’s board did not approve of the $20 billion acquisition — which would’ve been the company’s most expensive yet — and Otellini dropped the effort, according to The New York Times.
Instead, the board was reportedly more interested in an in-house graphics project called Larrabee, which was led by now-chief executive Pat Gelsinger.
Almost two decades later, Nvidia (NVDA) has become the second-most valuable public company in the world and continuously exceeds Wall Street’s high expectations. Intel, on the other hand, has seen its shares fall around 53% so far this year and is now worth less than $100 billion — around 30 times less than Nvidia’s $3.4 trillion market cap.
In August, Intel shares fell 27% after it missed revenue expectations with its second-quarter earnings and announced layoffs. The company missed profit expectations partly due to its decision to “more quickly ramp” its Core Ultra artificial intelligence CPUs, or core processing units, that can handle AI applications, Gelsinger said on the company’s earnings call.
And Nvidia wasn’t the only AI darling Intel missed out on.
Over a decade after passing on Nvidia, Intel made another strategic miss by reportedly deciding not to buy a stake in OpenAI, which had not yet kicked off the current AI hype with the release of ChatGPT in November 2022.
Former Intel chief executive Bob Swan didn’t think OpenAI’s generative AI models would come to market soon enough for the investment to be worth it, Reuters reported, citing unnamed people familiar with the matter. The AI startup had been interested in Intel, sources told Reuters (TRI), so it could depend less on Nvidia and build its own infrastructure.
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