NVIDIA vs. SMCI: Which AI Hardware Stock Is the Better Buy Now?

NVIDIA Corporation NVDA and Super Micro Computer, Inc. SMCI are both currently riding the artificial intelligence (AI) infrastructure boom. But with Supermicro facing margin pressure and NVIDIA offering far stronger profitability metrics, could NVDA now be the better investment? Let’s take a closer look –  Reasons to Be Bullish on NVIDIA Stock The rise in data center capital spending has led to stiff competition between NVIDIA and its peers, including Advanced Micro Devices, Inc. AMD and Intel Corporation INTC. However, despite the challenges, NVIDIA managed to post solid quarterly results consistently, banking on the rapid progress in AI. Quarter after quarter, NVIDIA’s performances were commendable due to the increasing demand for its chips, including the latest Blackwell architecture and cloud-based graphics processing units (GPUs). NVIDIA’s revenues jumped 62% year over year and 22% sequentially to $57 billion in the fiscal third quarter of 2026, according to investor.nvidia.com. In fact, the company expects revenues for the fiscal fourth quarter of 2026 to come in at nearly $65 billion, with a plus or minus 2%. And why not? Thawing trade tensions between the United States and China are expected to support NVIDIA’s sales. The U.S. government has approved the shipment of NVIDIA’s H200 AI chips to China, while Chinese authorities have permitted their sale to selected customers. Reasons to Be Bullish on SMCI Stock AI is significantly increasing demand for hardware, which is likely benefiting Supermicro. The company’s Data Center Building Block Solutions (DCBBS) has seen growing adoption among AI clients, offering a comprehensive package that includes integrated servers, networking, storage, cooling, software and related services. This momentum has translated into robust revenue growth, with its fiscal second-quarter 2026 sales climbing 123% year over year to $12.7 billion, easily exceeding analysts’ expectations of $10.4 billion, according to ir.supermicro.com.  CEO of Supermicro, Charles Liang, added that Supermicro is scaling its AI server and storage capabilities and that its DCBBS helps customers deploy AI infrastructure faster and cost-efficiently, positioning the company to gain from the next wave of AI demand. Management remains bullish about Supermicro’s sales outlook, expecting fiscal third-quarter 2026 revenues to reach $12.3 billion, and full-year net sales to hit $40 billion or more. NVIDIA or SMCI? Wall Street Is Betting Big on One AI Stock Despite Supermicro’s rapid rise in revenue growth, ongoing pressure on its gross margins for some time has remained a concern. So, Supermicro earns less profit per dollar of sales. This is largely because, acting as an intermediary between NVIDIA and cost-conscious customers, its products have offered limited differentiation in a highly challenging, commoditized market. Nonetheless, Supermicro’s gross margins dropped to 6.3% in fiscal second-quarter 2026 from 11.8% in the same quarter last year and 9.3% in the fiscal first quarter of 2026. Such low margins indicate that the company may face difficulties in generating profits once operating expenses are considered. In contrast, NVIDIA continues to demonstrate strong profitability, with its gross margin increasing to 73.4% in fiscal third-quarter 2026 from 72.4% in the fiscal second quarter of 2026, alongside steady revenue growth. NVIDIA, anyhow, consistently delivered stronger profits than Supermicro, reflected in its return on equity (ROE) of 99.2% compared with SMCI’s 17.8%. Image Source: Zacks Investment ResearchSupermicro, meanwhile, has a debt-to-equity ratio of 66.9%, higher than NVIDIA’s 6.3%, suggesting greater financial risk and increased exposure to economic headwinds. Image Source: Zacks Investment ResearchTherefore, NVIDIA clearly stands out as the better stock to buy at this time, thanks to robust demand for its advanced chips and improving trade relations. NVIDIA has a Zacks Rank #2 (Buy), while Supermicro has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here. Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Super Micro Computer, Inc. (SMCI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks