Investing.com — AI server maker Super Micro Computer Inc (NASDAQ:) plunged 33% on Wednesday and is down another 12% today after the company disclosed that its registered public accountant Ernst & Young LLP resigned amid an audit of the company fiscal year results. Amid the chaos at SMCI, analysts say another AI server maker stands to benefit – Dell Technologies Inc (NYSE:) (NASDAQ: DELL).
Dell rose 6% on Wednesday, but Mizuho desk analyst Jordan Klein thinks there is more upside and is now bullish on the stock.
“If you are not paying attention to the mess that is SMCI, you should,” Klien said. As a result, the analyst sees material upside for Dell over the next two to three quarters and would remain a buyer on any weakness.
“My view is any customer that does not want the risk of missing a deadline or financial target due to issues related to SMCI is going to move their AI server business to another supplier, like DELL,” the analyst added.
Klein also warns that SMCI supplier NVIDIA Corporation (NASDAQ:) is now at risk of missing guidance if SMCI cannot fund their business as they operate with negative working capital and require a lot of cash and funding to purchase large volumes of GPUs and liquid cooling product to build multi-million dollar NVL72 Blackwell rack systems.
“NVDA will probably start to move the majority of their GPU supply away from SMCI until they get clarity on the situation,” the analyst states. He said this benefits Dell.
With SMCI potentially hamstrung, this “removes a price aggressor on Gen AI server rates systems,” according to the analyst.
“Dell walked away from large tier one cloud supply agreements over weak margins (they preferred not to lose money on the revenues),” the analyst said. “Their focused on profitable tier 2 cloud customers. But maybe they can go back and WIN TIER 1 CLOUD SERVER DEALS WITH MORE GPU SUPPLY AND LESS PRICING PRESSURE FROM SMCI.”
Dell stock is down 3% in early trading Thursday.
