Economic uncertainty in the U.S. may be high right now, and it may be rising even further, but some things aren’t changing.
One constant is Walmart’s dominance on the Fortune 500 list, a ranking of companies based on their full-year revenue for the previous year. The retail giant continued to maintain its place at the top of the list for the 13th consecutive year, demonstrating an ability to rise through both good times and bad.
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However, the past year has brought new challenges for other companies, specifically those in the tech sector. Even the artificial intelligence (AI) field, which saw demand boom after the launch of ChatGPT in 2022, faced mass layoffs and trade complications from markets such as China.
While even Nvidia, (NVDA) the market’s undisputed leader, struggled against high volatility, a surprising AI stock, mostly popular among short sellers, surged on the Fortune 500 in 2024.
Image source: Bloomberg/Getty Images
While tech leaders struggled, a little-known company shot up
Most investors likely don’t pay much attention to the lower parts of the Fortune 500. The list is long, and the same industry-leading companies tend to hover around the top 10, though even Amazon remains unable to unseat Walmart.
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The current top 10 rankings only include three tech companies, illustrating just how difficult a time the sector has had. But while big tech companies struggled in 2024, IT hardware producer Super Micro Computer (SMCI) advanced 206 spots on the list, a feat that many experts likely weren’t expecting.
Known for its work designing and producing IT hardware such as storage systems, servers, and networking equipment, Super Micro Computer isn’t an unknown company by any means. But last year, it made plenty of headlines for negative reasons, including accusations of accounting manipulation from short-seller Hindenburg Research.
Since then, SMCI stock has been extremely volatile, but short interest in the company has surged. Data from Fintel shows that it currency accounts for almost 21% of the stock’s float, considered an extremely high number. Earlier this year, it ranked among the most-shorted tech stocks, according to market research firm Hazeltree.
Despite rising short interest, Super Micro Computer reported strong growth throughout the year, likely fueling its rise on the Fortune 500. Its revenue came in at just under $15 billion, a year-over-year (YOY) increase of 100%, and one-year profit growth reached $1.15 billion.
As Fortune reports, “The company’s rise is largely due to its strategic position at the intersection of AI, cloud computing, and data center infrastructure, three of the fastest-growing areas in technology today.”
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Companies typically attract interest from short sellers, since they are perceived to be struggling but still have further to fall. Yet SMCI stock has performed well since this year began, with year-to-date (YTD) gains of almost 45%, indicating that short sellers may be in trouble.
Investing expert sees opportunity for Super Micro Computer stock
Given Super Micro Computer’s clear progress but persisting short interest, some investors may have questions regarding how to approach the stock. After all, short sellers don’t typically target companies with strong revenue and profit growth unless they believe such progress isn’t sustainable.
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One expert believes that SMCI isn’t a stock that investors should disregard. Managing Member/Advisor of The ABC Squared Marcus Sturdivant, Sr. spoke to TheStreet about the opportunity he believes it represents.
“The ecosystem that should have been Intel’s seems to be occupied by SMCI for now,” he states. “They scaled on their close working and collaboration with Nvidia, which as of late has regained steam. Also working with the aforementioned Intel. Nvidia’s strong report last week bodes well for SMCI, which boasts of being 1A for Nvidia demand.”
Sturdivant, Sr. adds that from his perspective, Super Micro Computer seems “poised to continue its climb in market cap.” He notes that the company is not lacking in demand, citing its recent growth in producing and shipping servers while gaining market share as a resource for fast-growing areas such as AI and cloud computing.
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