These two artificial intelligence (AI) stocks may be better buys than Nvidia for the Blackwell launch

Chipsets known as graphics processing units (GPUs) are an integral component in the development of artificial intelligence (AI) applications. At this moment, Nvidia (NVDA 0.43%) holds approximately 88% of the AI ​​GPU market thanks to its industry-leading A100 and H100 GPUs.

In the coming months, Nvidia is set to add another GPU — called Blackwell — to its lineup. During the company’s most recent earnings call, Nvidia CFO Colette Kress said that “demand for Blackwell platforms far exceeds supply” and that the new chipsets were expected to generate billions in revenue by the fourth quarter .

While Blackwell appears to be a short-term tailwind for Nvidia, I see two other stocks as potentially better long-term opportunities.

Here’s why I think Super Micro Computer (SMCI -12.17%) and Dell Technologies (DELL 5.26%) they might be smarter purchases for the upcoming Blackwell release.

1. Super Micro Computer

Supermicro is an IT infrastructure company specializing in the design of storage clusters and server racks for GPUs. Rising demand for GPUs over the past two years has been a major catalyst for Supermicro’s business.

While Blackwell GPUs should ignite new opportunities among IT architecture specialists, I anticipate Supermicro to be a particular beneficiary given the company’s strong relationship with Nvidia. That said, there are a few important things to note about Supermicro’s business right now.

First, the company’s most recent earnings report from early August was a mixed bag. While revenue continues to grow at an impressive pace, the company’s gross margin is a glaring problem.

Generally, Supermicro’s business will have lower margins compared to a software business or a company that has huge pricing power like Nvidia. The reason for this is that designing storage clusters requires considerable capital expenditure (capex), which can affect profit margins.

SMCI Revenue Data (Quarterly) by YCharts

In addition to the financial results, Hindenburg Research recently published a short report alleging that Supermicro’s financial controls and accounting practices are weak. It’s important for investors to understand that short sellers like Hindenburg benefit when a stock’s price falls — as Supermicro is doing right now — but this isn’t the first time Supermicro has been at the center of accounting activity. accusations. In 2020, the Securities and Exchange Commission fined Super Micro Computer and its CFO for violating federal securities laws by “engaging in improper accounting – prematurely recognizing revenue and understating expenses from at least fiscal year … 2015 through in 2017”.

Additionally, the company is set to execute a 10-for-1 stock split next week; such an event will almost certainly trigger momentum-driven trading activity.

Finally, on September 26, The Wall Street Journal reported that anonymous sources said the Department of Justice (DOJ) is investigating Supermicro and seeking information apparently related to allegations of accounting violations.

However, details are scarce at this point. I would let this situation play out before running off and disabling Supermicro.

On top of all this, investor uncertainty around macro factors such as the Federal Reserve’s interest rate cut has also weighed on the selling activity in the market over the past few weeks.

Supermicro’s stock has seen a pretty steep selloff of late, and much of that revolves around a mix of hearsay, panic selling, and the macro economy.

Right now, Supermicro’s forward price-to-earnings (P/E) multiple is just 14 — nearly 72% of its highs since earlier this year. Moreover, this pales in comparison S&P 500Forward P/E of 23.

This pullback from previous valuation levels could make Supermicro shares a compelling opportunity as Blackwell’s launch is on the horizon.

SMCI PE Ratio data (before) by YCharts

2. Dell Technologies

Earlier this summer, Elon Musk’s AI startup xAI turned to Dell and Supermicro for server rack designs for its GPU clusters. While this deal came with high-profile headlines, Dell’s entire Infrastructure Solutions Group (ISG) is a winning operation.

During the second quarter of fiscal 2025 (ended August 2), Dell had $3.2 billion in AI-optimized server orders and ended the quarter with $3.8 billion in backlog.

In terms of revenue, ISG grew 38% year-over-year to a record $11.6 billion. Within ISG, sales from servers and networking equipment grew 80% year-over-year to $7.7 billion. Meanwhile, storage revenue of $4 billion actually fell 5%.

I see the launch of Blackwell as a further catalyst for Dell’s ISG segment, both for servers and networking as well as storage solutions. For me, Blackwell should drive even more demand for Dell infrastructure solutions. I suspect investors may begin to see Blackwell’s impact on Dell by looking at the details pending in future earnings reports.

Image source: Getty Images.

The bottom line

I think there is some risk in buying Supermicro shares right now, given that its stock will likely continue to experience huge volatility leading up to the October 1st split and as details of any government investigations emerge. Longer term, however, I think Blackwell GPUs will be a catalyst for Supermicro’s services, and new demand could ignite a stock rally.

While Dell’s forward P/E of 14.9 is in line with Supermicro’s, I view the company as the more conservative investment at this time as there is less hype surrounding the company compared to its peer.

However, I see both Supermicro and Dell as beneficiaries of the Blackwell launch, and I think the growth spurred by these new GPUs will last quite a while. For these reasons, investors may want to consider positions in each as Nvidia’s newest chipset release finds its way.