When it comes to artificial intelligence (AI)-driven gains for 2023, Palantir Technologies has become one of the top stocks mentioned in conversation. The company has long used AI in its Gotham and Foundry platforms, and its Artificial Intelligence Platform (AIP) has produced eye-popping productivity gains.

However, Palantir's market cap of nearly $40 billion and forward P/E of 72 may have sent investors looking for AI stocks with lower valuations. Investors looking for an alternative may want to consider Super Micro Computer (SMCI -1.42%).

What is Super Micro?

Admittedly, Super Micro is not as well known as Palantir or other frequently covered stocks in the AI space, such as Nvidia. Super Micro stands out as a "rack-scale" IT solutions provider, designing servers, switches, storage systems, and software with global support services.

Since this approach combines hardware and software, it provides a competitive advantage over peers who focus primarily on either hardware or software. Also, the company's focus on energy savings and environmentalism helps it attract more planet-conscious customers.

Despite a market cap of only $14 billion, Super Micro has built a customer base in more than 100 countries. And so large is its operation that it requires more than 6 million square feet of manufacturing space globally.

Super Micro by the numbers

Consequently, in the first quarter of fiscal 2024 (ended Sept. 30), the revenue of just over $2.1 billion rose 14% compared to the same quarter last year. This was a significant deceleration from fiscal 2023 when revenue grew by 37%. The company blamed the lower revenue growth on seasonality during the summer and a constrained supply chain.

Also, a 43% increase in operating expenses hit the company during fiscal Q1 as the company works to add capacity. As a result, net income fell 15% for the year to $157 million.

Additionally, the demand surge led to more need to attract talent through stock-based compensation. Thus, that expense came to $57 million in fiscal Q1, up from $11 million in the year-ago quarter.

Still, Super Micro maintained its fiscal 2024 revenue guidance of $10 billion to $11 billion. This amounts to a 47% increase at the midpoint, indicating the slower growth from fiscal Q1 is temporary.

The fiscal Q1 earnings report did little to deter investors as the stock has risen by more than 210% over the last 12 months. And despite that surge, the stock sells at a P/E ratio of 24. Considering the rapid growth expected, Super Micro's gains are not likely to stop anytime soon.

Consider Super Micro stock

Amid that low valuation, buying Super Micro could serve investors well. Thanks to a lack of name recognition, investors are only now seeing the potential for this AI stock.

Consequently, investors can buy a fast-growing stock at a low price. This means that if they missed the opportunity to buy Palantir more cheaply, Super Micro gives them a second chance. Moreover, with its ability to combine hardware and software, it appears to have a competitive advantage in the AI space.

Admittedly, the fiscal Q1 results were comparatively disappointing. However, the supply constraints appear temporary, and unlike many AI companies, it has remained profitable, giving it a measure of stability not found in many tech stocks. These factors bode well for Super Micro as it attracts increasing business activity.