Super Micro Computer shares surge as AI server demand powers big forecast raise

Super Micro Computer shares surge as AI server demand powers big forecast raise

Super Micro Computer’s (SMCI.O) shares soared approximately 25% to a historic high on Friday, driven by the company’s optimistic projection of quarterly results surpassing current estimates, thanks to robust demand for artificial intelligence servers. The surge also reflects increasing demand for the company’s liquid cooling solutions, particularly from data centers processing a growing number of generative AI applications.

Rosenblatt Securities analyst Hans Mosesmann suggested that the company’s positive outlook is likely propelled by earlier-than-expected hyperscale engagements. These engagements prioritize the rapid deployment of liquid-cooled racks, an area where Supermicro excels. Notable clients for Supermicro include NASA and Japan’s NEC (6701.T).

The buoyant estimates from Supermicro align with the upbeat sentiment in the chip industry, sparked by Taiwan Semiconductor Manufacturing Co’s (2330.TW) optimistic note on AI, contributing to a global rally in chip stocks. Super Micro’s current market capitalization of $17.3 billion is anticipated to increase by over $4 billion at the recent stock price of $387.90.

Headquartered in San Jose, California, Super Micro now anticipates net sales between $3.6 billion and $3.65 billion for the quarter ending Dec. 31, compared to the prior forecast of $2.7 billion to $2.9 billion. The company also raised its adjusted profit expectation to a range of $5.40 to $5.50 per share, up from the earlier projection of $4.40 to $4.88 for the second quarter.

Supermicro’s remarkable 71% sequential growth surpasses the estimated GenAI market growth of approximately 41% for the December quarter. Analyst Nehal Chokshi from Northland Securities highlighted this significant outperformance.

Since CEO Charles Liang emphasized the positive impact of generative AI momentum in May last year, Supermicro’s stock has more than tripled. The company’s forward price-to-earnings multiple is 16.22, compared to 7.58 for Hewlett Packard Enterprise (HPE.N) and 16.72 for International Business Machines (IBM.N).

 

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