NVDA reported its latest quarterly results after the close yesterday. My thoughts:

–NVDA’s gross income has been expanding very strongly over the past couple of years because sales of its AI chips have been exploding upward and because its most important cost, the compensation of its researchers, has been rising at a much slower rate. My reading of the income statement said that, having reached margins of 75% or so, there wasn’t much more operating leverage to be had. If margin expansion was most likely at an end, then sales growth would be the sole driver of income gains. My question was how many owners, or potential owners, had looked at the accounts. Not many was my answer to myself.

So I was pleasantly surprised that the revelation of this phenomenon overnight only caused the stock to decline by about 3%. We’ll learn more when trading opens.

—Hindenburg, the professional short-seller, issued a report on Super Micro Computer (SMCI). Hindenburg states that SCMI was delisted a number of years ago because it could not produce accurate financial statements. The company fired executives who were responsible for manipulation of accounts and was subsequently relisted. However, Hindenburg asserts, the company rehired the same executives, who went back to their old habits. Hence, SMCI’s apparent inability to produce accurate financials now.

A second point. NVDA has developed alternative distribution partners, among them Dell, which, Hindenburg says, is distributing AI servers at cost to gain market share. If so, not good news for SCMI.