Could this move by Nvidia protect the company from Super Micro Computer's problems?

Since Supermicro's problems with the Hindenburg report began to date, the stock has lost 52%.

Now let's look at how Nvidia fits into the Supermicro picture. As Supermicro notes in its 2023 annual report, large equipment orders “may require greater commitments to working capital, which may require greater borrowings under our credit facilities to finance purchases of key components.” And in recent earnings reports, Supermicro noted that demand for its Rack-scale solutions with Nvidia GPUs remain high.

Given Supermicro's current struggles, the risk here is that the company could struggle to increase borrowing to finance orders, and this could impact Nvidia's revenue, at least in the short term. The situation is particularly notable today as Nvidia prepares to launch its Blackwell architecture, a new platform in high demand.

So should we be worried about Nvidia now? Well, the top chip designer may be taking the necessary steps to avoid significant supply chain issues and impact on its sales. According to a report, Nvidia is moving Supermicro orders to other providers DigiTimes Asia Article.

This is positive as it should minimize the impact on sales and keep the supply chain running, but it is possible that Nvidia will see some impact in the short term. After all, Supermicro is one of the leading device manufacturers, and as demand for Blackwell exceeds supply, every player involved in bringing Blackwell to customers plays a key role.

Still, it's important to take a long-term view of this situation, and if we do, there's reason to be confident about Nvidia even as Supermicro navigates difficult waters. If the DigiTimes The report is correct, Nvidia is taking the right steps and any potential impact on Nvidia's sales or short-term delays in order delivery should be limited thanks to this type of proactive step.

Even better, the potential impact today won't change Nvidia's positive long-term picture. Nvidia's products and services are in high demand and the company works with a wide range of players – from device manufacturers to cloud service providers – to ensure customers have access to them. All of this means that if Nvidia stock slips due to Supermicro's recent troubles, it represents a fantastic buying opportunity.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in Nvidia and recommends it. The Motley Fool has a disclosure policy.

Could this move by Nvidia protect the company from Super Micro Computer's problems? was originally published by The Motley Fool