Billionaire Israel Englander Is Selling Nvidia and Palantir and Piling Into a Historically Cheap, Yet Potentially Troubled, Artificial Intelligence (AI) Stock
2024-10-14 12:06:00
In mid-August, Wall Street received its most important data dump of the third quarter — and I’m not talking about an inflation report from the Bureau of Labor Statistics.
August 14 marked the deadline for institutional investors and money managers with at least $100 million in assets under management to file Form 13F with the Securities and Exchange Commission. A 13F offers an under-the-hood look at which stocks Wall Street’s smartest and most-successful money managers purchased and sold in the latest quarter (in this instance, the June-ended quarter).
Here’s the historically inexpensive AI stock Israel Englander can’t stop buying
While Englander was a busy seller of two of Wall Street’s top artificial intelligence stocks, he was also an avid buyer of a jaw-droppingly cheap AI stock whose path forward has become clouded in recent months. I’m talking about customizable rack server and storage solutions specialist Super Micro Computer (NASDAQ: SMCI).
When adjusted for the 10-for-1 stock split Super Micro completed two weeks ago, Englander’s Millennium Management purchased 5,533,230 shares during the second quarter, which increased the fund’s existing stake in the company by more than 800% since the end of March.
Just as Nvidia has become the go-to provider of AI-GPUs for high-compute data centers, Super Micro Computer has been a top infrastructure player for businesses looking to build out their AI data centers. Super Micro incorporates Nvidia’s ultra-popular H100 GPU into its customizable rack servers, which is enhancing the desirability of its solutions.
In fiscal 2024, which ended on June 30, the company delivered net sales growth of 110% to $14.94 billion. For fiscal 2025, the midpoint of Super Micro’s revenue forecast calls for $28 billion. Despite a forecast annualized earnings growth rate of 62% through fiscal 2029, shares of the company are currently trading at less than 11 times EPS for fiscal 2026.
The reason Super Micro Computer’s stock isn’t trading at a more aggressive premium given its lofty growth projections is because of mounting headwinds. For example, it was the target of a short-seller report from Hindenburg Research in late August. Hindenburg has alleged “accounting manipulation” at Super Micro. Although the company has denied these allegations, it’s also delayed the filing of its annual report and is reportedly facing an early stage probe from the U.S. Justice Department.
There’s also concern that supply chains may hamper Super Micro Computer’s ability to meet its clients’ needs. Nvidia’s H100 GPUs are in such high demand that Super Micro’s rack servers may fall victim to supply backlogs.
Suffice it to say that, despite its relative cheapness, Super Micro Computer is a risky wager for Englander and Millennium Management.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Billionaire Israel Englander Is Selling Nvidia and Palantir and Piling Into a Historically Cheap, Yet Potentially Troubled, Artificial Intelligence (AI) Stock was originally published by The Motley Fool
