Should You Forget Super Micro Computer and Buy These 2 Millionaire-Maker AI Stocks Instead?

Super Micro Computer‘s stock soared more than 30% on Nov. 19 after it appointed a new independent auditor and submitted a compliance plan to Nasdaq to avoid a potential delisting. Those announcements addressed its two pressing issues: the departure of its auditor Ernst & Young in October, and a delayed filing for its 10-K report, which could cause its stock to be delisted.

But even after that rally, Supermicro’s stock remains 76% below its all-time high from this March. The server maker’s shares are still being weighed down by concerns about its sliding gross margins, competition from bigger server makers like Dell Technologies and Hewlett Packard Enterprise, and troubling allegations of inflated revenues from a prolific short seller. Its delayed annual report and loss of Ernst & Young seemed to support that bearish thesis, and the Department of Justice (DOJ) is reportedly getting ready to probe Supermicro’s business.

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Supermicro’s stock looks dirt cheap at 8 times forward earnings, but it will likely trade at that discount until it fully resolves its accounting and regulatory issues. So instead of betting on Supermicro’s long-shot turnaround, investors would probably be better off sticking with these two millionaire-maker blue chip AI stocks instead: Microsoft (NASDAQ: MSFT) and Broadcom (NASDAQ: AVGO).

Microsoft generated a total return of more than 900% over the past decade. That rally, which was mainly driven by the explosive growth of its cloud business, would have turned a $100,000 investment into more than $1 million.

Microsoft turned into a growth stock again after Satya Nadella, who became its CEO in 2014, drove the company to transform its desktop-based software into cloud-based services and mobile apps. It also turned Azure into the world’s second-largest cloud infrastructure platform and expanded its hardware and gaming businesses.

Over the past five years, Microsoft ramped up its investments in OpenAI, the creator of ChatGPT, and integrated the start-up’s generative AI tools into its own search and cloud services. Thanks to that foresight, it tethered more businesses and consumers to its cloud ecosystem, and it gained a first-mover’s advantage against Alphabet‘s Google and other tech giants in the nascent generative AI market.

In fiscal 2024 (which ended this June), Microsoft’s AI-driven transformation boosted its total cloud revenues by 23% to $135 billion — which represented 55% of its top line. From fiscal 2024 to fiscal 2027, analysts expect its revenue and earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 14% and 15%, respectively. Its stock still looks reasonably valued at 28 times next year’s earnings, and it will likely remain a top play on the AI market for years to come.

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