The Nvidia (NVDA 1.27%) juggernaut is showing no signs of stopping as the semiconductor behemoth delivered another set of stunning results for the first quarter of fiscal 2025 (for the three months ended April 28) on May 22 that easily crushed Wall Street's expectations.
While Nvidia's revenue jumped a whopping 262% year over year to $26 billion, its non-GAAP earnings shot up 461% to $6.12 per share. Analysts would have settled for $5.60 per share in earnings on revenue of $24.6 billion. What's more, Nvidia has guided for fiscal second-quarter revenue of $28 billion at the midpoint of its guidance range, which would be more than double the $13.5 billion revenue it posted in the prior-year period and well above the $26.6 billion consensus estimate.
There were more goodies in store for Nvidia investors as the company increased its quarterly-cash dividend by 150% and also pointed out that it will start shipping its next-generation Blackwell chips ahead of schedule. All this indicates that Nvidia's red-hot stock market rally is here to stay. The stock has jumped 115% in 2024 already, and its latest results and guidance point toward more gains.
NASDAQ: NVDA
Key Data Points
But if you're one of those investors who have missed the Nvidia gravy train and are wary of buying the stock now because of its expensive valuation -- even though it may be able to justify it -- it would be a good idea to take a closer look at Super Micro Computer (SMCI 4.30%) and Snowflake (SNOW 2.80%). Let's look at the reasons why.
1. Super Micro Computer
Nvidia's phenomenal results gave server manufacturer Super Micro Computer a nice boost. That wasn't surprising as the robust demand for Nvidia's artificial intelligence (AI)-focused chips bodes well for Super Micro, whose server solutions are used for mounting those chips in data centers.
Nvidia CFO Colette Kress pointed out on the latest earnings conference call that the demand for its current and next-generation chips could exceed supply going into 2025. That's good news for Super Micro as it should continue to see healthy demand for its AI-optimized servers and sustain the terrific growth it has been clocking in recent quarters.
SMCI Revenue (Quarterly) data by YCharts.
Super Micro's revenue forecast of $14.9 billion for the current fiscal year would translate into a 110% increase from the previous year's reading of $7.1 billion. Similarly, its earnings expectation of $23.69 per share for fiscal 2024 would be double last year's level of $11.81 per share. However, it won't be surprising to see Super Micro growing at a faster pace than it is currently forecasting.
That's because the company has already revealed server solutions for Nvidia's Blackwell chips, which will start shipping in the current quarter and ramp up as the year progresses. Reports suggest that Super Micro has already received huge orders for servers optimized for mounting Blackwell processors, and it could be expected to fulfill a quarter of the demand for servers built using Nvidia's next-gen chips.
Not surprisingly, Super Micro's top and bottom lines are expected to grow substantially over the next couple of fiscal years.
SMCI Revenue Estimates for Next Fiscal Year data by YCharts.
Super Micro's revenue is expected to quadruple in just three years (given that it delivered $7.1 billion in revenue in the previous fiscal year), while earnings could jump 3.5 times by fiscal 2026 from fiscal 2023's reading of $11.81 per share. More importantly, it isn't too late for investors to buy this AI stock as it is trading at an attractive 4.4 times sales and 25 times forward earnings.
Nvidia, on the other hand, has a sales multiple of 33 along with a forward-earnings multiple of 43. Even better, analysts are expecting Super Micro's earnings to increase at an annual rate of 62% for the next five years, giving investors yet another solid reason to accumulate this stock before it flies higher.
2. Snowflake
Snowflake may not be as popular an AI name as the other two companies discussed in this article. But the company, which provides a cloud-based platform that helps organizations to store, organize, analyze, and build applications using their proprietary data, believes that AI could become its next big growth driver.
NYSE: SNOW
Key Data Points
Snowflake stock is down over 21% in 2024 thanks to poor guidance and management transition announced in February. However, the company's first-quarter fiscal 2025 results (for the three months ended April 30) suggest that AI could play an important role in driving future growth.
The company's top line increased 33% year over year to $829 million, easily exceeding the $787 million consensus estimate. More importantly, the company's fiscal Q2 product-revenue forecast of $805 million to $810 million was ahead of the $793 million estimate and points toward a year-over-year increase of 26.5% at the midpoint. The company has also raised its full-year product-revenue guidance to $3.3 billion from $3.25 billion.
Snowflake's remaining performance obligations, a metric that refers to the total value of a company's contracts that are yet to be fulfilled, increased 46% year over year to $5 billion. That was faster than the growth in its top line, indicating that the company is building a solid revenue pipeline for the future.
It seems that AI is playing a central role in boosting Snowflake's growth prospects. CEO Sridhar Ramaswamy pointed out in the company's press release: "Our AI products, now generally available, are generating strong customer interest. They will help our customers deliver effective and efficient AI-powered experiences faster than ever."
It is worth noting that Snowflake has been investing aggressively in AI infrastructure and has been looking to quickly deploy AI-focused products to help its customers make the most of their data. The company has also teamed up with Nvidia to help its customers deploy custom AI models for various tasks, such as translation, summarization, sentiment analysis, extracting content from documents, and creating generative AI-powered assistants.
Additionally, Snowflake is looking to shore up its AI capabilities by acquiring TruEra, an observability platform that will allow enterprises to monitor and evaluate the performance of large language models (LLMs) and machine learning models. Such moves should allow Snowflake to set itself up for stronger long-term growth as high-quality data is important for the development of robust, generative AI applications.
As such, it won't be surprising to see Snowflake stock gaining momentum as its AI-focused moves start paying off. The stock is currently trading at 17 times sales. Though that's expensive, the sales multiple is lower than last year's reading of 24 and significantly cheaper than Nvidia. However, it may become more expensive in the future thanks to Snowflake's growing AI chops, which is why it would be a good idea to buy it before it soars higher.
