CHIPS, CHIPS, HOORAY!
(SMCI), (NVDA), (META), (GOOGL), (TSLA)
Nvidia (NVDA), the king of the AI chipmaker hill, has been making Wall Street swoon for quite some time, with its shares skyrocketing by 1,700% over the past five years. But there seems to be a new kid on the block that has been turning heads lately.
Enter Super Micro Computer (SMCI), whose stock has surged an eye-watering 98% just this year, making it the talk of the town among investors.
Now, you might be wondering, "Is Super Micro a one-hit wonder or a mainstay in the making?" Well, let's dive into the nitty-gritty and find out.
Super Micro Computer is not exactly “new” to the game. Founded in the prehistoric tech era of 1993 and stepping into the public limelight with an initial public offering in 2007, this company has been crafting computer hardware with a focus on servers, storage, and security gear for quite some time.
Fast forward a few years, and artificial intelligence (AI) has become the golden ticket, supercharging Super Micro Computer's sales like never before.
Why, you ask? Well, because when it comes to AI, the name of the game is computing power — tons of it.
Let’s go back to Nvidia. These little electronic geniuses are the muscle behind crunching colossal data sets and birthing AI models. Imagine building a supercomputer; you're not just picking up a couple of GPUs from the store — you're hauling in thousands.
And when I say AI demands computing power, we're talking about a voracious appetite. Companies such as Meta Platforms (META), Alphabet (GOOGL), and Tesla (TSLA) are gobbling up AI chips like there's no tomorrow.
Meta's Mark Zuckerberg, for instance, announced plans to snag a whopping 350,000 H100 chips from Nvidia, each priced at a cool $30,000.
Yes, you heard that right—350,000 chips with a price tag that makes your car look cheap.
Now, making all these GPUs play nice together is no small feat. This is where Super Micro Computer comes in.
Basically, Super Micro Compute serves as the tech world's custom tailor, stitching together server solutions for any tech runway, be it engineering marvels, medical breakthroughs, or the brainy depths of AI.
So, what sets it apart? The company has this knack for creating server racks that are like a cozy, high-tech home for these pricey AI chips, complete with proprietary cooling tech that's a hit among the big data center operators.
The proof of the company’s prowess is in the pudding. For the second quarter of fiscal year 2024 (ending last December 31), Super Micro Computer posted sales of an impressive $3.66 billion.
This is a staggering 103% jump from the previous year, with the company smashing past the $2.8 billion forecast.
And the Super Micro Computer isn't hitting the brakes there either, with revenue expectations soaring to about $3.9 billion for the third quarter and a revised full-year forecast shooting up from $10.5 billion to a whopping $14.5 billion.
But can Super Micro chase down Nvidia's crown? Well, with shares up an astonishing 3,630% over the last five years (putting Nvidia's 1,700% increase in the shade), they're certainly making waves.
Yet, with a market cap of "only" $30 billion compared to Nvidia's titanic over $1 trillion, it's still very much a David versus Goliath scenario.
However, for those investors with a thirst for growth and an eye for AI's future, Super Micro Computer could be your golden ticket. It may not be the cheapest stock on the block, but if it delivers on its lofty earnings promises, there might be more surprises in store.
