Why Super Micro Computer, Applied Materials, and C3.ai Rallied Today


Artificial Intelligence (AI) Stock Actions Super microcomputer (NASDAQ:SMCI), Applied materials (NASDAQ:AMAT)And C3.ai (NYSE:IA) rallied on Friday, up 6.1%, 6.9% and 6.2%, respectively, in Friday trading.

None of these actions had any company-specific news today. However, generally speaking, artificial intelligence stocks have continued to advance on a strong flow of information on the outlook for AI, which only appears to be improving.

Today's news included an optimistic announcement from the Biden administration on CHIPS and Science Act grants and a breaking news report that Sam Altman, founder of OpenAI is looking to raise an incredible amount of money for an AI-related chip company.

$5 billion for chip research, billions for OpenAI?

On Friday, the Biden administration announced a $5 billion investment in a public-private research and development consortium for chipmakers. The goal of the consortium, funded by the bipartisan CHIPS Act of 2022, is to accelerate innovation and development of the U.S. chip manufacturing workforce, with a focus on AI chips. In the announcement, Commerce Secretary Gina Raimondo said:

This is an inflection point in the industry… not only because we are dangerously dependent on a single country for many of our chips, but because AI will drive an explosion in chip demand , sophisticated chips, more energy. -efficient chips, cost-effective chips.

While it's difficult to determine the direct benefit to any one company, it could be a boon for Applied Materials, which is one of the world's largest and most diverse suppliers of semiconductor equipment. Last year, Applied announced a multi-year, $4 billion investment in its own R&D research platform, EPIC.

Although it is unclear whether Applied will be directly involved in the government consortium, it is possible that Applied will receive grants for some of these expenses. It is also likely that new government-funded research and education centers will purchase more applied materials equipment for their research laboratories.

Image source: Getty Images.

In addition to the funding announcement for the new CHIPS Act, the entire AI ecosystem was shaken by last night's stunning event. Wall Street Journal report that Sam Altman, founder and CEO of OpenAI, is seeking $5 trillion to $7 trillion in funding for a massive overhaul of the global semiconductor manufacturing industry.

Yes, you read that right. A thousand billion.

The project aims to increase the number of AI chips produced worldwide. As a current leader in the AI ​​field, Altman says OpenAI's progress has been hampered by a shortage of powerful AI chips needed to accelerate OpenAI's innovation and growth.

Altman is apparently looking to change that on his own, which would be a pretty massive undertaking for any company – let alone a “start-up” like OpenAI! Hence the massive financial figures floating around, with potential investors including oil-rich governments like the United Arab Emirates.

A surge in global chipmaking would likely again be a boon for Applied Materials as well as Super Micro Computer, which has carved out a niche as the go-to server platform for AI infrastructure .

It's unclear how the news will directly affect AI software maker C3.ai, but it appears that this story is boosting most companies that have anything to do with the AI ​​ecosystem. This even includes Nvidiaup more than 3.5% today, although Altman's move could be aimed at building alternative chips to Nvidia's dominant graphics processing units (GPUs).

The AI ​​boom may just be beginning

While these stocks have already seen significant moves, it certainly looks like they deserve the bulk of last year's and this year's gains. AI chips are still in short supply and becoming table stakes for businesses and governments around the world. This is why we see industry leaders and governments continuing to invest significant sums in AI chip manufacturing, which will likely benefit these AI-related stocks.

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Billy Duberstein has positions in Applied Materials and Super Micro Computer and has the following options: January 2025 short sale of $110 on Super Micro Computer, January 2025 short sale of $125 on Super Micro Computer, short sale of January 2025 at $130 on Super Micro Computer, January 2025 short sale at $280 on Super Micro Computer, and short sale January 2025, $85 is put on Super Micro Computer. Its clients may hold shares of the companies mentioned. The Motley Fool ranks and recommends Applied Materials and Nvidia. The Motley Fool recommends C3.ai and Super Micro Computer. The Motley Fool has a disclosure policy.

Why Super Micro Computer, Applied Materials and C3.ai rallied today was originally published by The Motley Fool



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