To The Moon

$NVIDIA Corp(NVDA)$ successfully broke through the trillion-dollar mark, and a superstar also quietly accompanied the rise of Nvidia has soared 40% in three days, and its stock price soared 180% within 5 months.

The company is $SUPER MICRO COMPUTER INC(SMCI)$ , a leader in high-performance computing and artificial intelligence solutions, and an absolute beneficiary of the AI trend.

Super Micro is an IT solutions company that provides server solutions optimized for high-performance computing (HPC) and artificial intelligence (AI), with a market share of approximately 1.9% in the server hardware category.

There are many players in the ecosystem, such as lithography giant $ASML Holding NV(ASML)$, chipmaker $Taiwan Semiconductor Manufacturing(TSM)$, and AI chip design giant $NVIDIA Corp(NVDA)$ .

Then there are real estate investment trusts (REITs) that host servers, some companies that build their own computers and servers, and that's where $SUPER MICRO COMPUTER INC(SMCI)$ comes in.

Three fundamental factors that supported the price surge are as following:

1.Backed by Giants

$SUPER MICRO COMPUTER INC(SMCI)$ is not particularly unique in its server hardware assembly business. However, its close collaboration with $NVIDIA Corp(NVDA)$ , $Advanced Micro Devices(AMD)$ , and $Intel(INTC)$ , and its focus on energy-efficient server system design certainly created a lot of momentum.

• Supermicro's upstream suppliers mainly include chip manufacturers such as $NVIDIA Corp(NVDA)$ $Advanced Micro Devices(AMD)$ , and $Intel(INTC)$ as well as other manufacturers that provide components such as memory, hard drives, and power supplies.

• Supermicro's downstream customers mainly include cloud computing service providers, data center operators, artificial intelligence research institutions, high-performance computing users, etc., as well as other enterprises and institutions that require high-performance, high-efficiency and green computing servers and storage solutions.

By the end of March 2023, Super Micro Computer has cooperated with $NVIDIA Corp(NVDA)$ to launch a comprehensive IT solution, supporting system combinations from the cloud to the edge. These include GPU servers equipped with NVIDIA HGX H100 systems, NVIDIA L4 and L40 GPUs, and OVX 3.0 systems. The solution provides high-performance GPU servers optimized for AI, DL, ML and HPC workloads. Liquid cooling and NVIDIA accelerators further boost performance and energy efficiency. Super Micro Computer also provides NVIDIA L4 GPU and PCIe acceleration solutions for enterprise, cloud and edge, supporting various AI inferencing, video streaming and graphics applications.

2. Demand-driven on cloud products

With focus on HPC and AI computing applications, $SUPER MICRO COMPUTER INC(SMCI)$ is at the center of two fast-growing industry trends.

In recent years, cloud computing has been attracting much attention. 'Cloud computing' refers to powerful servers owned by a particular company. When connected to the cloud, it only needs to send the data stored on the local device to the cloud server for storage. Big tech companies like $Alphabet(GOOG)$ , $Amazon.com(AMZN)$ and $Microsoft(MSFT)$ rent or sell storage space on supercomputers, known as 'cloud computing'.

There is a recent cloud computing innovation of 'cloud clusters', which refers to hosting multiple cloud computers in different regions. Each region has a cluster of computers that acts as a local highway for information, similar to the more general expression that sums up the Internet as an 'information superhighway'. Each cluster is synchronized, and if any one cluster fails, information on that cluster is still readily available on all other clusters.

3. The demand for basic data operations is increasing

This cloud computing innovation provides a lot of convenience to end users in terms of data security and computing speed, and also greatly increases the requirement of advanced servers that need to store and process large amounts of data. It will directly benefit SUPER MICRO's position in the field of cloud computing/high performance computing.

Artificial intelligence (AI) has recently swept the world rapidly, and from a technical point of view, AI requires a lot of matrix multiplication calculations. Discrete graphics cards are used exclusively for this type of computing, and $NVIDIA Corp(NVDA)$ is far ahead in graphics card technology. As a result, the stock price has risen sharply, and the price-earnings ratio even exceeds 100 times.

The biggest problem with artificial intelligence is that it requires a lot of electricity to run the models, and the data and performance demands of the models will only increase. The need for high levels of computing power will continue to increase over time. $SUPER MICRO COMPUTER INC(SMCI)$ is very competitive in this field.

In Summary:

Benefiting from the growing demand in cloud computing, artificial intelligence, big data and other fields, as well as close cooperation with technology partners such as $NVIDIA Corp(NVDA)$ , $SUPER MICRO COMPUTER INC(SMCI)$ provides customers with the most advanced server systems and solutions.

Its unique product portfolio, including server building block solutions and rack-scale plug-and-play products, positions it well in the fast-growing cloud computing and artificial intelligence industries.

Super Micro's high-efficiency energy utilization and close cooperation with leading chip design companies have further enhanced its competitive advantages. The company's leadership in high-performance computing and artificial intelligence and its growth prospects are good.

Market watch Analysts’ average target price for $SUPER MICRO COMPUTER INC(SMCI)$ is $181.67, and Current price is $223.95.