Super Micro Computer and Texas Instruments have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 29, 2024 – Zacks Equity Research shares Super Micro Computer SMCI as the Bull of the Day and Texas Instruments TXN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BP plc BP, Shell plc SHEL and Eni SpA E.
Here is a synopsis of all five stocks:
Bull of the Day:
Super Micro Computer reports its December results today after the closing bell.
But much of the excitement and accolades have already happened after the provider of datacenter infrastructure equipment and solutions pre-announced better than expected revenues and profits on January 19.
That Friday, SMCI shares surged 36%. And they were up as much as 15% last week to more all-time highs near $500.
So the stage is set for "Supermicro" management to deliver more good news about their 2024 outlook that could further boost estimates and sustain, if not amplify, the current explosive rally.
What SMCI Had to Shout About
Here's how the company describes their business...
Supermicro is a global technology leader committed to delivering first-to-market innovation for Enterprise, Cloud, AI, Metaverse, and 5G Telco/Edge IT Infrastructure. We are a Rack-Scale Total IT Solutions provider that designs and builds an environmentally-friendly and energy-saving portfolio of servers, storage systems, switches, software, along with global support services.
And on January 19 they stunned Wall Street with preliminary revenue of $3.6 billion, which tore through prior guidance of $2.7-2.9 billion, representing 100% year-over-year growth for the company's fiscal Q2.
Earnings for the quarter are projected to spike to $5.55 a share, topping analysts estimates of $4.50 EPS.
The company cited strong market and end customer demand for its rack-scale, AI and Total IT Solutions.
For its current fiscal year which ends in June, Super Micro is on pace to deliver 53% topline growth to nearly $11 billion and 40% EPS growth to cross $16.50.
And even after the huge rally in SMCI shares this month, with projected 15% revenue growth to cross $12.5 billion next year the stock still trades at only 2 times sales!
Accelerating Data Storage for High-Performance AI Training and Inference
Then on Friday January 25, SMCI announced a new product/platform...
Supermicro is launching full stack optimized storage solution for AI and ML data pipelines from data collection to high performance data delivery. This new solution maximizes AI time-to-value by keeping GPU data pipelines fully saturated. For AI training, massive amounts of raw data at petascale capacities can be collected, transformed, and loaded into an organization's AI workflow pipeline.
This multi-tiered Supermicro solution has been proven to deliver multi-petabyte data for AIOps and MLOps in production environments. The entire multi-rack scale solution from Supermicro is designed to reduce implementation risks, enable organizations to train models faster, and quickly use the resulting data for AI inference.
The Strategist Who Saw It Coming
There is surprisingly low analyst coverage for SMCI on Wall Street. And that may be changing this month.
But one trader-strategist who has been all over the company in the past year is my colleague Andrew Rocco, who was pounding the table to buy SMCI in October in reports like these...
Bull of the Day: Super Micro Computer
October: Where Bear Markets go to Die
Chart Storm: 6 Strong Technical Set-Ups for Q4
And Rocco even gave us one last "heads-up" on December 12...
Want to Play the "Santa Claus" Rally? Buy these 3 Stocks
While you're waiting for SMCI earnings tonight, and deciding when you should add some shares, check out any of Andrew's articles above for more "intel" on the undercover powerhouse of the AI revolution.
Bear of the Day:
Texas Instruments dropped to the cellar of the Zacks Rank after reporting Q4 revenues and profits that told the continuing tale of stagnation for the key provider to legacy semiconductor and electronics markets.
Earnings of $1.49 per share surpassed the Zacks Consensus Estimate by 2%, which was within the guided range of $1.35-$1.57.
However, the figure declined 30% year over year and 19.5% sequentially.
TXN reported revenues of $4.08 billion, which lagged the Zacks Consensus Estimate of $4.11 billion. The figure came within management's guidance of $3.93-$4.27 billion.
Revenues decreased 13% from the year-ago quarter's level and 10% sequentially.
The year-over-year decline was attributed to weakness across various end markets. The company witnessed sluggishness in its Analog, Embedded Processing and Other segments.
On a sequential basis, Texas Instruments suffered from widespread weakness in the industrial and communication equipment markets.
A sequential decline by mid-single digits in the automotive market was a major concern.
Meanwhile, personal electronics remained flat while enterprise systems grew by low-single digits.
Segments in Detail
Analog: Revenues of $3.12 billion were generated from the segment (77% of total revenues), down 12% from the year-ago quarter's level. The figure came above the Zacks Consensus Estimate of $3.05 billion.
Embedded Processing: Revenues amounted to $752 million (18% of total revenues), down 10% year over year. The figure lagged the Zacks Consensus Estimate of $826 million.
Other: Revenues totaled $205 million (5% of total revenues). The figure was down 25% from the prior-year quarter's level and missed the consensus mark of $228 million.
2024 Guidance
For first-quarter 2024, TXN expects revenues between $3.45 billion and $3.75 billion.
The company expects earnings within 96 cents-$1.16 per share.
After these results and guidance, full-year 2024 EPS estimates dropped 16.5% from $6.54 to $5.46, representing nearly a 23% decline from 2023.
And next year's profit projection was also clipped nearly 16%.
TXN shares dropped 5.5% after the report. And they remain sideways for the past year as they fail to participate in the AI revolution.
There will be a time to buy TXN again this year after the sales and profit outlook stabilizes. Until then, watch the Zacks Rank for signs of the turnaround.
Additional content:
3 Integrated Majors Leading the Energy Transition Race
Economies across the world are gradually transitioning to cleaner energy sources. There has been a steady increase in pressure on energy companies to act on climate change on multiple fronts. Most analysts believe that although renewable energy will meet future energy needs, it will not completely wipe out oil and natural gas demand. Demand for fossil fuels will also grow but at a slower pace.
The U.S. Energy Information Administration, in its Annual Energy Outlook 2023, revealed that through 2050, renewables will increasingly match power demand. Thus, there are abundant opportunities for energy companies with a footprint in oil and gas resources or transporting commodities and the renewable energy space. Three such companies are BP plc, Shell plc and Eni SpA.
3 Stocks
BP, a British energy giant, is planning to become a net-zero emissions player by 2050 or earlier. The integrated company intends to invest and create its renewable energy generation capacity of 20 gigawatts by 2025. The company also has strong upstream and downstream activities.
Shell also has the same ambitious target of becoming a net-zero emissions energy player by 2050 or earlier. By 2030, the integrated energy company plans to lower absolute emissions by 50%.
Eni is leading the energy transition as well. The integrated energy player has been building a full set of decarbonized products and services for clients to achieve carbon neutrality by mid-century. Even though the energy business scenario is challenging, Eni's efficient exploration keeps it highly competitive.
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Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
BP p.l.c. (BP) : Free Stock Analysis Report
Eni SpA (E) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Shell PLC Unsponsored ADR (SHEL) : Free Stock Analysis Report
