Super Micro Computer: There's Still Gas Left In The Tank

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Super Micro Computer: There's Still Gas Left In The Tank

seekingalpha05-27

Super Micro is leading the way as it benefits from Nvidia's leadership in AI chips.Super Micro looks ready to capitalize on the next AI growth wave in enterprise and sovereign AI adoption.The company ...

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旅行蛙
·05-27
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WealthBuilder
·05-27
Price will rocket when next QR is released . Malaysia plant that can produce server at Lower cost will boost profit
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With an anticipated 5,000 total monthly rack capacity, Super Micro's rapid go-to-market strategy suggest","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4549":"软银资本持仓","BK4548":"巴美列捷福持仓","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0061475181.USD":"THREADNEEDLE (LUX) AMERICAN \"AU\" (USD) ACC","BK4554":"元宇宙及AR概念","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","BK4532":"文艺复兴科技持仓","BK4515":"5G概念","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4534":"瑞士信贷持仓","BK4567":"ESG概念","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","SMCI":"超微电脑","LU0109391861.USD":"富兰克林美国机遇基金A Acc","BK4535":"淡马锡持仓","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","IE00BJJMRX11.SGD":"Janus Henderson Balanced A Acc SGD","LU0079474960.USD":"联博美国增长基金A","GB00BDT5M118.USD":"天利环球扩展Alpha基金A Acc","LU0082616367.USD":"摩根大通美国科技A（dist）","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","LU0061474960.USD":"天利环球焦点基金AU Acc","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","IE0004445015.USD":"JANUS HENDERSON BALANCED \"A2\" (USD) ACC"},"translate_title":"超微计算机：油箱里还有汽油","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SMCI":1.1},"content_text":"Super Micro is leading the way as it benefits from Nvidia's leadership in AI chips.Super Micro looks ready to capitalize on the next AI growth wave in enterprise and sovereign AI adoption.The company is focusing on gaining market share quickly, potentially hurting near-term profitability.Super Micro must establish its leadership by bringing its cutting-edge AI rack solutions ahead of its peers.SMCI is still valued cheaply, given its growth potential. Consider buying before it potentially reaches its all-time high.JHVEPhotoSuper Micro Ready To Ride On Nvidia's HypeIn my previous bullish SMCI article in March 2024, I upgraded my thesis on Super Micro Computer, Inc. (NASDAQ:SMCI) stock. While not bearish, I explained why my previous cautious ratings (Hold) didn't seem justified, as the AI hype has demonstrated its sustainability for SMCI. As one of the leading companies focusing on AI rack server solutions, Super Micro is in a prime position to leverage Nvidia's (NVDA) leadership as the AI chips designer.Nvidia's Q1 earnings release this week underscored the robustness of its revenue growth trajectory with another beat-and-raise quarter. Analysts have struggled to fully understand the significant growth opportunities attributed to Nvidia's AI monetization potential in the near term. Nvidia's incredible execution has downplayed these fears, as the King of AI expects to be supply constrained through 2025.Notwithstanding my optimism, SMCI has struggled to maintain its upward momentum, even though NVDA stock has burst through new all-time highs this week. As a result, could SMCI's growth spurt over the past year be over as potential fears of more intense competition emerge?Dell (DELL) held its investor conference this month, demonstrating Dell's full-stack approach to AI. Nvidia CEO Jensen Huang emphasized his company's close collaboration with Dell as Nvidia looks to access Dell's enterprise and government customer base. Nvidia and Dell are working closely to increase the adoption of AI factories and fulfill Nvidia's ambitions to \"extend generative AI capabilities to every company worldwide.\" Therefore, as AI broadens beyond cloud hyperscalers to enterprise and industry verticals, Super Micro could face higher execution challenges.Super Micro's Next Growth Wave: Sovereign AIDespite that, Super Micro is confident of scaling quickly with its modular approach for its hyperscale, tier-2 cloud service providers, and enterprise customers. In addition, Super Micro believes that it can deliver 2,000 direct liquid cooling monthly rack capacity by the end of June. With an anticipated 5,000 total monthly rack capacity, Super Micro's rapid go-to-market strategy suggests it can gain market share quickly in the DLC space. Super Micro expects liquid cooling adoption to \"increase to 20% of data centers over the next 12 to 18 months.\" With a current adoption rate of just 1% for liquid cooling in data centers, Super Micro's ability to expand market share quickly could be pivotal to solidifying its leadership position.Super Micro management is committed to its GTM strategy, balancing price and volume growth. While DLC rack servers are anticipated to produce more robust margin accretion moving ahead, Super Micro is focused on gaining market share in the near term. As a result, investors must anticipate potential margin dilution as Super Micro looks to secure its market advantages and demonstrate its core value proposition.Moreover, the anticipated traction in sovereign AI could bolster another potentially massive AI growth wave that is not captured in the current demand/supply dynamics. Super Micro management emphasized \"increasing investment plans in AI from both sovereigns and enterprises in EMEA and Europe.\"As a result, Super Micro believes near-term monetization from \"a continued strong track of investment over the next 12 months.\" Nvidia CEO Jensen Huang reminds investors that \"no country can afford to outsource its intelligence on first principles.\" As a result, sovereign AI demand is expected to gain solid and sustainable growth momentum as countries need to harness their unique and \"native data as their natural resource\" and \"transfer them into artificial intelligence.\" Therefore, it suggests that the AI growth upcycle could be far from over as the adoption broadens to the enterprise and sovereign opportunities.Is SMCI Stock A Buy, Sell, Or Hold?SMCI Quant Grades (Seeking Alpha)SMCI stock is assigned a \"C\" valuation grade, corroborating its reasonable valuation. SMCI's forward adjusted PEG ratio of 0.79 is more than 60% below its sector median. Analysts' estimates have been revised upward, bolstering Super Micro's execution prowess and growth opportunities.Despite that, concerns about its near-term margin impact are justified, as Super Micro needs to lift CapEx while balancing price and volume opportunities to gain market share quickly. As a result, SMCI's \"D\" profitability grade underscores the inherent profitability volatility in its business model and strategy, potentially affecting near-term buying sentiments.I have assessed it could have contributed to the relatively tepid buying momentum recently. Investors have likely reassessed whether heightened competition beyond the hyperscaler space could introduce more volatility on Super Micro's profitability model relative to its long-term gross margin outlook of between 14% and 17%.Notwithstanding the caution, I have assessed that SMCI's buying momentum (\"A+\" momentum grade) has remained incredibly robust. Therefore, investors are likely accumulating (and not distributing), adding exposure progressively before the next upcycle toward its all-time highs.Rating: Maintain Buy.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":310386786930712,"gmtCreate":1716787454960,"gmtModify":1716791865514,"author":{"id":"3562839524718897","authorId":"3562839524718897","name":"旅行蛙","avatar":"https://static.tigerbbs.com/141de2e30f8b2c0e13678c64cfd16ea4","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3562839524718897","authorIdStr":"3562839524718897"},"htmlText":"🚀🚀🚀","listText":"🚀🚀🚀","text":"🚀🚀🚀","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/310386786930712","repostId":2437052520,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":310374840287424,"gmtCreate":1716784454534,"gmtModify":1716791866325,"author":{"id":"4171803256903022","authorId":"4171803256903022","name":"WealthBuilder","avatar":"https://community-static.tradeup.com/news/c38f4668f8134a2f2f17efffb35d19b4","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"4171803256903022","authorIdStr":"4171803256903022"},"htmlText":"Price will rocket when next QR is released . Malaysia plant that can produce server at Lower cost will boost profit","listText":"Price will rocket when next QR is released . Malaysia plant that can produce server at Lower cost will boost profit","text":"Price will rocket when next QR is released . Malaysia plant that can produce server at Lower cost will boost profit","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/310374840287424","repostId":2437052520,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":4,"commentSize":2,"repostSize":2,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}