Super Micro Computer has seen huge growth recently due to the high demand for AI servers. The company makes custom servers and works closely with top chipmakers like Nvidia and AMD. This has helped its earnings soar, with revenue hitting $3 billion in a single quarter.
That’s as much as the company made in all of 2021. Supermicro’s stock has also taken off, gaining 188% in the first half of 2023—even better than Nvidia’s 149% rise.
Analysts say Supermicro is growing five times faster than the industry average. One big trend that could boost Supermicro even more is massive investment in data centers, especially for AI. AI systems generate a lot of heat, so efficient cooling is crucial.
Supermicro’s direct liquid cooling (DLC) systems can cut electricity costs by 40% and noise by 55%. The company expects DLC to capture up to 30% of the market share in the coming years, up from less than 1% historically. Supermicro has seen record demand for its AI solutions with DLC.
With huge spending expected on AI data centers, demand should stay very high. That’s why some predict Supermicro will be one of the biggest winners in AI by 2030.
Supermicro stock surges amid AI boom
The stock looks appealing to investors who want to capitalize on the AI boom. While Supermicro’s market value is currently just $41 billion, its strong position in AI servers suggests significant growth ahead. Some believe it could join tech giants like Apple, Microsoft, and Nvidia in the $1 trillion market cap club.
Supermicro benefits from close ties with top AI chipmakers, ensuring access to in-demand processors. In its latest quarter, revenue jumped 200% to $3.8 billion, and earnings per share soared 329%. Management sees continued triple-digit growth, projecting $14.9 billion in revenue this year.
Analysts estimate Supermicro has increased its industry market share from 8% to 11%. The stock was also recently added to the Nasdaq-100 index, reflecting its rising prominence. To reach a $1 trillion market cap, Supermicro would need to grow annual revenue to around $363 billion based on its current valuation.
Management thinks 50% growth could get it there by 2032. But surging demand for AI servers might accelerate that timeline. The AI server market is forecast to expand by 50% annually through 2026.
If Supermicro can capture even a fraction of that explosive growth, it may ascend to the ranks of the world’s most valuable companies sooner than expected. The company’s strong execution and favorable industry dynamics make it a stock to watch in the coming AI-driven era.
