Key Points
Dell and Hewlett Packard Enterprise both beat earnings over the past week, igniting hopes for Super Micro investors.
Super Micro stock seems a relative bargain next to pricey Dell and HPE.
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Powerful earnings reports from Dell (NYSE: DELL) last week and Hewlett Packard Enterprise (NYSE: HPE) last night are translating into momentum for Super Micro Computer (NASDAQ: SMCI) this morning.
Shares of the artificial intelligence servers specialist surged a lucky 7% through 11:25 a.m. ET Tuesday.
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Good news for Dell and HPE
In nearly back-to-back reports, first Dell reported 87.5% sales growth and a 256% increase in profits per share last week, followed shortly by HPE's report of an "exceptional" Q2, featuring "record-breaking revenue, higher-than-anticipated profitability, and increased free cash flow." HPE's not doing quite as well as Dell, but its 40% increase in sales, driven by demand for artificial intelligence data centers, helped to nearly triple earnings for the business-focused computer company.
HPE's sales surged 40% in the quarter, producing powerful profits along the way. Gross profit margins shot up more than eight full percentage points to 36.5%. Non-GAAP earnings beat expectations, while earnings calculated under generally accepted accounting principles (GAAP) nearly tripled to $1.26 per share.
On guidance, Dell forecast 47% sales growth and 99% earnings growth for its full fiscal year 2027, while HPE, still working its way through fiscal 2026, said sales should grow about 31%, GAAP profits will turn positive, and non-GAAP earnings will grow more than fourfold!
What this means for Super Micro stock
Granted, none of the above necessarily translates into good news for Super Micro stock. But Super Micro makes AI servers just like Dell and HPE do. It stands to reason that if their sales and profits are exploding higher, then Super Micro's will as well.
Best of all, while Dell stock costs 54 times earnings, and HPE is only a bit cheaper at 44 times earnings, Super Micro stock seems a relative bargain at just 25 times earnings today.
Should you buy stock in Super Micro Computer right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hewlett Packard Enterprise. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
