This has been a great year for many companies, especially technology companies working in the field of artificial intelligence (AI). They led gains in all three indices, from Standard & Poor’s 500 and Nasdaq to Dow Jones Industrial Average. In fact, a new member of Dao Nvidia It is on track to achieve top performance in this index this year thanks to its AI strengths.
Investors have piled into AI stocks because the technology promises to be revolutionary, marking history much like the development of the telephone or the Internet. Analysts expect today’s $200 billion AI market to reach $1 trillion by the end of the decade, so companies and investors who enter this field now could stand to gain big.
However, not all AI companies have reaped the rewards recently. Super micro computer(NASDAQ: SMCI) and Intel(Nasdaq: INTC) Both have faced challenges in recent months, which has affected the performance of their stocks. Which is the best buy recovery story for 2025? Let’s find out.
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Supermicro stock soared in the first half of the year, rising 188%. The company makes equipment such as servers and workstations, and demand is growing from artificial intelligence customers. This translated into triple-digit quarterly revenue growth.
But several news hurt Supermicro in the second half of the year. First, a short report by Hindenburg Research alleged problems at the company. Supermicro then delayed submitting its application 10-K Annual Report It will then file its quarterly 10-Q report. Meanwhile, the company’s auditor resigned, and late financial filings put the company at risk of being delisted from the Nasdaq stock exchange.
The stock fell 67% from Hindenburg’s report to its mid-November low. But brighter news has emerged in recent weeks. Supermicro has found a new auditor and submitted a plan to Nasdaq to regain compliance — Nasdaq has since granted an extension until February 25, and Supermicro says it expects to file by then.
Therefore, the worst could be behind Supermicro, making a possible recovery during 2025.
Intel dominates the market Central processing units (Central Processing Units), the main processors that power most computers. But some problems burdened this technological giant. First, it is losing market share to… Advanced micro devices In the desktop CPU market. Second, Intel failed to make an early entry into the AI market, and although it has delivered compelling products in recent quarters, it has struggled to catch up with the leaders.
Moreover, some investors have expressed concern about the investment involved in Intel’s decision to become a chip maker, providing plumbing services not only for itself, but for its competitors. The spending has had an impact on the company’s free cash flow in recent years.
Intel’s announcement of a $10 billion cost-cutting program, including a plan to cut 15% of its workforce, did not reassure investors — and when it was announced in August, the stock fell 26% in a single trading session.
More recently, Intel ousted CEO Pat Gelsinger and appointed two executives to share the role while the company searches for a permanent replacement.
Given all this, Intel is going through a major transition period right now, which means there could be big changes in 2025 and beyond.
Supermicro appears to be on the right track for recovery, but there is a key element missing: audited financial reporting. Although Supermicro says it does not expect any adjustments, it is important for investors to take a look at the company’s recent financial performance before making any investment decisions. That’s why I’ll keep Supermicro on my watch list for now and stop buying the stock.
As for Intel, it is now impossible to know what direction the company will take because the interim leaders have just taken charge – and we don’t know yet whether they will take significant steps or maintain the status quo until a new CEO arrives. Will Intel continue its plans to become a leading chip maker? This decision alone, whether the answer is “yes” or “no,” can lead to completely different outcomes for the company. Without Intel’s strategic vision, it will be impossible to make an informed investment decision.
So, now, I would say keep an eye on these two companies in the new year. But right now, it’s too early to invest in either of them no matter how exciting their valuations are. The message here is that even if a struggling company reaches a turning point, it’s still a good idea to approach it with caution and not jump into every recovery story until we have an idea of what the future might be.
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Adria Cimino He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: Short February 2025 $27 calls on Intel. The Motley Fool has Disclosure policy.
