2024-02-16 13:57:53 ET
Summary
- At the time of writing, Super Micro Computer, Inc. stock had already gained more than $500 since posting strong Q2 results, driven by AI-related demand.
- Despite being a long-time partner of Nvidia, it faces competition and does not enjoy the same level of profitable growth.
- Also, demand for AI infrastructure is high, but competition, not only from other OEMs but especially from cloud service providers may impact its sales sustainability.
- As such, it is considerably overvalued.
- The underlying theme of this thesis is that demand for AI should be sustained, but the way it will be consumed by enterprises will likely be through the cloud.
Super Micro Computer, Inc. ( SMCI ), which was trading at $1,004 at the time of writing, has gained more than $500 since January 29, when its top line results for the second quarter of the fiscal year 2024 (FQ2) surged by 103% year-on-year driven mostly by AI-related demand. This reminds us of its long-time partner NVIDIA Corporation ( NVDA ), enjoying a YoY revenue surge of 101% in the July quarter last year.
A comparison of these two reveals that SMCI's stock has surged by more than 800% during the last year, outpacing the semiconductor giant's 224% as tabled below, possibly because its CEO mentioned that "demand may last for many decades to come" as part of the AI revolution. It is also trading at a big discount relative to Nvidia....
Read the full article on Seeking Alpha
For further details see:
Super Micro Computer: Unjustified AI Optimism And Around 31% Overvalued