Super Micro Computer: Liquid-Cooled SuperCluster Growing In AI Era; Initiate With 'Buy'

seekingalpha06-13

Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions ...

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跟随时代引领者
06-12
跟随时代引领者
老牌国家队，至少翻两倍！！！

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href=https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions ...</p>\n\n<a href=\"https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy\">网页链接</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4170","symbol_name":"电脑硬件、储存设备及电脑周边","start_time":0,"source_url":"https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy","article_id":"2442672556","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2442672556","pubTimestamp":1718292223,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions 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(INTC). Supermicro has a strong product pipeline optimized for the entire computing stack in data centers. Given the rapid growth in AI computing, I anticipate Supermicro will continue its rapid growth in the near term. I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.Robust Liquid-Cooled AI Superclusters PortfolioSupermicro has advanced power management solution by increasing rack KW density with direct liquid cooling technology. There are several reasons why Supermicro is gaining popularity in the AI computing era:Liquid cooling technology enables hyperscalers to reduce the energy consumptions, making these superclusters favored by hyperscalers and AI operators. According to IEA, global data center electricity consumption in 2022 was around 1-1.3% of global final electricity demand. However, global data center energy consumption has risen rapidly in recent years, and is expected to continue to increase due to AI computing. Data center operators have a strong incentive to reduce their energy bills. During the recent earnings call, Supermicro’s management disclosed that the liquid cooling technology can save 40% of total energy costs for data centers, which is quite significant.IEA ReportAs illustrated in the slide below, Supermicro provides total IT solutions for data centers including software, hardware and services, and these racks provide plug-and-play solutions for data centers. The turkey solution includes servers, storage, blades, workstations, full rack scale solutions, networking devices and other software/hardware solutions.Supermicro Investor PresentationSupermicro has a broad range of liquid-Cooled AI superclusters. In June 2024, they introduced Rack Scale Plug-and-Play Liquid-Cooled AI SuperClusters for NVIDIA Blackwell and NVIDIA HGX H100/H200 and several more Superclusters are coming soon including Supermicro NVIDIA HGX B200, Supermicro NVIDIA HGX B100/B200 and Supermicro NVIDIA GB200 NVL72 or NVL36. In addition, Supermicro announced its IT solutions based on Intel’s Xeon 6700-series processors with E-cores. These innovative superclusters could potentially help Supermicro gain more market share in AI data center market.Recent Result and FY25 OutlookOn April 30th, Supermicro released its Q3 FY24 result, with 200% growth in revenue and 290% growth in adjusted operating income. My biggest takeaway from the quarter can be summarized as follows:Supermicro continues to lead in NVIDIA HGX H100 SuperCluster solutions, and the management claimed that the solution offers 2-3 times higher power density compared to traditional racks from its competitors.Supermicro has a rich portfolio roadmap, including upcoming AI racks for NVIDIA H200, B100, B200, GH200 and GB200 GPUs as well as Intel Gaudi2, Gaudi3 and AMD MI300X and MI300A GPUs. These new solutions can support both air cooling and DCL cooling technologies, paving a solid foundation for Supermicro’s future growth.Due to the strong performance, Supermicro raised the full-year revenue guidance to $14.7 billion- $15.1billion. I am considering the following factors for its near-term growth:With the rapid growth in AI computing, the GPU market is forecasted to grow at a CAGR of 33%+ from 2024 to 2029, according to a report by Mordor Intelligence. As Supermicro provides solutions for all the major GPU vendors, even without assuming any market share gains, Supermicro could potentially grow its revenue by 30%+ in the near-term.Mordor IntelligenceGPU power consumption is reaching 700-1000 watts, as shown in the table below. The increasing power consumption requires advanced cooling technology on the thermal side. The advancement of GPU computing powers could potentially stimulate the industry adoption of premium cooling technology. Consequently, Supermicro could benefit significantly from this technology trend.Tom's Hardware ReportOverall, I am quite comfortable that Supermicro will grow its revenue by more than 30% in FY25.ValuationAs Supermicro has already delivered strong growth over the past three quarters, I don’t anticipate its revenue growth will deviate much from its guidance for FY24; therefore, I assume 110% revenue growth in FY24 in the DCF model.As analyzed previously, I estimate Supermicro will deliver 30%+ growth in the near-term. As AI investment gradually shifts from training to inference in the future, the overall growth in data centers could potentially decelerate. At the AI inference stage, more AI related demands would be at the edge side, including edge networking, AI PCs, AI smartphones etc.As such, I assume Supermicro’s revenue growth will decelerate to 20% from FY27, then to 15% from FY29 and to 10% from FY31. That said, I am still optimistic that Supermicro can deliver 30%+ revenue growth in the next three years.On the margin side, the primary driver will be the gross profit leverage. Supermicro has been reallocating its manufacturing facilities over the past few years. More specifically, the company has shifted more manufacturing to Taiwan, and they are building a new facility in Malaysia. As indicated in a recent conference, the management was quite confident in reducing manufacturing costs in the future. To be conservative, I only assume 10bps annual margin improvement in the DCF model. After all, Supermicro is a hardware manufacture, which typically carries lower margin than software and platform vendors.Supermicro DCF - Author's CalculationsThe free cash flow from equity is calculated as follows:Supermicro DCF - Author's CalculationsThe cost of equity is calculated to be 16.8% assuming: risk-free rate 4.2% (US 10Y Treasury); Beta 1.8 (Seeking Alpha); equity risk premium 7%.Discounting all the future FCFE at a 16.8% discount rate, the one-year price target is calculated to be $900 per share.RisksRelated Party: Ablecom, a company based in Taiwan, is one of the major contract manufacturers for Supermicro. Ablecom’s CEO, Steve Liang, is the brother of Charles Liang, Supermicro’s President, CEO and Chairman of the Board. Charles Liang and his spouse own 10.5% of Ablecom’s capital stock as of June 30, 2023. Additionally, Compuware is one of Supermicro’s major distributors. Compuware’s CEO, Bill Liang, is the brother of Steve Liang and Charles Liang. From an audit perspective, this presents a corporate governance issue, as investors’ interest might get eroded by these internal transactions.Relationship with China: Although China represents <1% of total revenue, Supermicro owns 30% of a corporate venture in China, with another Chinese company owning 70%. It is uncertain whether Supermicro will expand its business in China or continue the corporate venture in an indirect way.Competition from Dell (DELL) and Hewlett Packard Enterprise (HPE): Both Dell and HP are developing their own liquid-cooling AI servers. As both companies own a significant market share in the traditional server market, investors should not underestimate the competition in the AI server market.VerdictI favor Supermicro’s leading liquid cooling technology in data center market, potentially reducing energy bills by 40%. The rapid growth in data center will continue driving Supermicro’s growth in the near-term. Supermicro is well poised to partner with all the major GPU manufactures and ride the tide of AI computing. Therefore, I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":316122540118200,"gmtCreate":1718204641685,"gmtModify":1718204643728,"author":{"id":"3539226526191807","authorId":"3539226526191807","name":"跟随时代引领者","avatar":"https://static.tigerbbs.com/e632c6874b74a39bde40a05821700892","vip":1,"crmLevel":5,"crmLevelSwitch":0},"htmlText":"老牌国家队，至少翻两倍！！！","listText":"老牌国家队，至少翻两倍！！！","text":"老牌国家队，至少翻两倍！！！","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/316122540118200","repostId":2442672556,"repostType":2,"repost":{"id":"2442672556","pubTimestamp":1718292223,"share":"https://www.laohu8.com/m/news/2442672556?lang=&edition=full","pubTime":"2024-06-13 23:23","market":"nz","language":"en","title":"Super Micro Computer: Liquid-Cooled SuperCluster Growing In AI Era; Initiate With 'Buy'","url":"https://stock-news.laohu8.com/highlight/detail?id=2442672556","media":"seekingalpha","summary":"Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions i","content":"<html><head></head><body><ul style=\"\"><li><p>Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.</p></li><li><p>Supermicro&#39;s strong product pipeline optimized for data centers positions it for rapid growth in the AI computing era.</p></li><li><p>Anticipated revenue growth of 30%+ in the near term, leading to a &#39;Buy&#39; rating with a one-year price target of $900 per share.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/bacb291a0b637df312033186b3032319\" tg-width=\"750\" tg-height=\"580\"/></p><p>Erik Isakson</p><p></p><p>Super Micro Computer (NASDAQ:SMCI) offers liquid-cooled AI superclusters, in partnership with major GPU players including Nvidia (NVDA), AMD (AMD) and Intel (INTC). Supermicro has a strong product pipeline optimized for the entire computing stack in data centers. Given the rapid growth in AI computing, I anticipate Supermicro will continue its rapid growth in the near term. I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.</p><h2 id=\"id_1528499975\">Robust Liquid-Cooled AI Superclusters Portfolio</h2><p>Supermicro has advanced power management solution by increasing rack KW density with direct liquid cooling technology. There are several reasons why Supermicro is gaining popularity in the AI computing era:</p><ul style=\"\"><li><p>Liquid cooling technology enables hyperscalers to reduce the energy consumptions, making these superclusters favored by hyperscalers and AI operators. According to IEA, global data center electricity consumption in 2022 was around 1-1.3% of global final electricity demand. However, global data center energy consumption has risen rapidly in recent years, and is expected to continue to increase due to AI computing. Data center operators have a strong incentive to reduce their energy bills. During the recent earnings call, Supermicro’s management disclosed that the liquid cooling technology can save 40% of total energy costs for data centers, which is quite significant.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/8f8e824897e697593eb839044a79c59a\" tg-width=\"640\" tg-height=\"382\"/></p><p>IEA Report</p><p></p><ul style=\"\"><li><p>As illustrated in the slide below, Supermicro provides total IT solutions for data centers including software, hardware and services, and these racks provide plug-and-play solutions for data centers. The turkey solution includes servers, storage, blades, workstations, full rack scale solutions, networking devices and other software/hardware solutions.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/716620d71c3097689b4676b417788744\" tg-width=\"640\" tg-height=\"346\"/></p><p>Supermicro Investor Presentation</p><p></p><ul style=\"\"><li><p>Supermicro has a broad range of liquid-Cooled AI superclusters. In June 2024, they introduced Rack Scale Plug-and-Play Liquid-Cooled AI SuperClusters for NVIDIA Blackwell and NVIDIA HGX H100/H200 and several more Superclusters are coming soon including Supermicro NVIDIA HGX B200, Supermicro NVIDIA HGX B100/B200 and Supermicro NVIDIA GB200 NVL72 or NVL36. In addition, Supermicro announced its IT solutions based on Intel’s Xeon 6700-series processors with E-cores. These innovative superclusters could potentially help Supermicro gain more market share in AI data center market.</p></li></ul><h2 id=\"id_3049828180\">Recent Result and FY25 Outlook</h2><p>On April 30th, Supermicro released its Q3 FY24 result, with 200% growth in revenue and 290% growth in adjusted operating income. My biggest takeaway from the quarter can be summarized as follows:</p><ul style=\"\"><li><p>Supermicro continues to lead in NVIDIA HGX H100 SuperCluster solutions, and the management claimed that the solution offers 2-3 times higher power density compared to traditional racks from its competitors.</p></li><li><p>Supermicro has a rich portfolio roadmap, including upcoming AI racks for NVIDIA H200, B100, B200, GH200 and GB200 GPUs as well as Intel Gaudi2, Gaudi3 and AMD MI300X and MI300A GPUs. These new solutions can support both air cooling and DCL cooling technologies, paving a solid foundation for Supermicro’s future growth.</p></li></ul><p>Due to the strong performance, Supermicro raised the full-year revenue guidance to $14.7 billion- $15.1billion. I am considering the following factors for its near-term growth:</p><ul style=\"\"><li><p>With the rapid growth in AI computing, the GPU market is forecasted to grow at a CAGR of 33%+ from 2024 to 2029, according to a report by Mordor Intelligence. As Supermicro provides solutions for all the major GPU vendors, even without assuming any market share gains, Supermicro could potentially grow its revenue by 30%+ in the near-term.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/f008d0f412779639ae709897d08974a6\" tg-width=\"640\" tg-height=\"322\"/></p><p>Mordor Intelligence</p><p></p><ul style=\"\"><li><p>GPU power consumption is reaching 700-1000 watts, as shown in the table below. The increasing power consumption requires advanced cooling technology on the thermal side. The advancement of GPU computing powers could potentially stimulate the industry adoption of premium cooling technology. Consequently, Supermicro could benefit significantly from this technology trend.</p></li></ul><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/57244faa985350b20ff75d54fd4f0cdb\" tg-width=\"640\" tg-height=\"275\"/></p><p>Tom&#39;s Hardware Report</p><p></p><p>Overall, I am quite comfortable that Supermicro will grow its revenue by more than 30% in FY25.</p><h2 id=\"id_43866584\">Valuation</h2><p>As Supermicro has already delivered strong growth over the past three quarters, I don’t anticipate its revenue growth will deviate much from its guidance for FY24; therefore, I assume 110% revenue growth in FY24 in the DCF model.</p><p>As analyzed previously, I estimate Supermicro will deliver 30%+ growth in the near-term. As AI investment gradually shifts from training to inference in the future, the overall growth in data centers could potentially decelerate. At the AI inference stage, more AI related demands would be at the edge side, including edge networking, AI PCs, AI smartphones etc.</p><p>As such, I assume Supermicro’s revenue growth will decelerate to 20% from FY27, then to 15% from FY29 and to 10% from FY31. That said, I am still optimistic that Supermicro can deliver 30%+ revenue growth in the next three years.</p><p>On the margin side, the primary driver will be the gross profit leverage. Supermicro has been reallocating its manufacturing facilities over the past few years. More specifically, the company has shifted more manufacturing to Taiwan, and they are building a new facility in Malaysia. As indicated in a recent conference, the management was quite confident in reducing manufacturing costs in the future. To be conservative, I only assume 10bps annual margin improvement in the DCF model. After all, Supermicro is a hardware manufacture, which typically carries lower margin than software and platform vendors.</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/d3672550b80883b9d7360a61fcaaf7b7\" tg-width=\"640\" tg-height=\"256\"/></p><p>Supermicro DCF - Author&#39;s Calculations</p><p></p><p>The free cash flow from equity is calculated as follows:</p><p></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/7090464f6f12cb68c342c5e87eca5f20\" tg-width=\"640\" tg-height=\"92\"/></p><p>Supermicro DCF - Author&#39;s Calculations</p><p></p><p>The cost of equity is calculated to be 16.8% assuming: risk-free rate 4.2% (US 10Y Treasury); Beta 1.8 (Seeking Alpha); equity risk premium 7%.</p><p>Discounting all the future FCFE at a 16.8% discount rate, the one-year price target is calculated to be $900 per share.</p><h2 id=\"id_650203939\">Risks</h2><ul style=\"\"><li><p>Related Party: Ablecom, a company based in Taiwan, is one of the major contract manufacturers for Supermicro. Ablecom’s CEO, Steve Liang, is the brother of Charles Liang, Supermicro’s President, CEO and Chairman of the Board. Charles Liang and his spouse own 10.5% of Ablecom’s capital stock as of June 30, 2023. Additionally, Compuware is one of Supermicro’s major distributors. Compuware’s CEO, Bill Liang, is the brother of Steve Liang and Charles Liang. From an audit perspective, this presents a corporate governance issue, as investors’ interest might get eroded by these internal transactions.</p></li><li><p>Relationship with China: Although China represents &lt;1% of total revenue, Supermicro owns 30% of a corporate venture in China, with another Chinese company owning 70%. It is uncertain whether Supermicro will expand its business in China or continue the corporate venture in an indirect way.</p></li><li><p>Competition from Dell (DELL) and Hewlett Packard Enterprise (HPE): Both Dell and HP are developing their own liquid-cooling AI servers. As both companies own a significant market share in the traditional server market, investors should not underestimate the competition in the AI server market.</p></li></ul><h2 id=\"id_2625254767\">Verdict</h2><p>I favor Supermicro’s leading liquid cooling technology in data center market, potentially reducing energy bills by 40%. The rapid growth in data center will continue driving Supermicro’s growth in the near-term. Supermicro is well poised to partner with all the major GPU manufactures and ride the tide of AI computing. Therefore, I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Super Micro Computer: Liquid-Cooled SuperCluster Growing In AI Era; Initiate With 'Buy'</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSuper Micro Computer: Liquid-Cooled SuperCluster Growing In AI Era; Initiate With 'Buy'\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-13 23:23 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions ...</p>\n\n<a href=\"https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4170":"电脑硬件、储存设备及电脑周边","LU0417517546.SGD":"Allianz US Equity Cl AT Acc SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0072462426.USD":"贝莱德全球配置 A2","LU0080751232.USD":"富达环球多元动力基金A","LU1803068979.SGD":"FTIF - Franklin Technology A (acc) SGD-H1","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4549":"软银资本持仓","LU1989764664.SGD":"CPR Invest - Global Disruptive Opportunities A2 Acc SGD-H","IE00BJJMRY28.SGD":"Janus Henderson Balanced A Inc SGD","LU0308772762.SGD":"Blackrock Global Allocation A2 SGD-H","IE0034235295.USD":"PINEBRIDGE GLOBAL DYNAMIC ASSET ALLOCATION \"A\" (USD) ACC","LU0321505868.SGD":"Schroder ISF Global Dividend Maximiser A Dis SGD","BK4585":"ETF&股票定投概念","LU0109392836.USD":"富兰克林科技股A","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU0175139822.USD":"AB FCP I Global Equity Blend A USD","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0061474705.USD":"THREADNEEDLE (LUX) GLOBAL DYNAMIC REAL RETURN \"AU\" (USD) ACC","LU0109391861.USD":"富兰克林美国机遇基金A Acc","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","BK4527":"明星科技股","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","BK4579":"人工智能","BK4588":"碎股","LU1861215975.USD":"贝莱德新一代科技基金 A2","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","BK4543":"AI","BK4503":"景林资产持仓","LU1951200564.SGD":"Natixis Thematics AI & Robotics Fund R/A SGD","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","BK4573":"虚拟现实","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","LU1316542783.SGD":"Janus Henderson Horizon Global Technology Leaders A2 SGD","BK4581":"高盛持仓","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","AMD":"美国超微公司","SMCI":"超微电脑","LU2458330169.SGD":"FRANKLIN SHARIAH TECHNOLOGY \"A\" (SGD) ACC","NVDA":"英伟达","LU0234570918.USD":"高盛全球核心股票组合Acc Close","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC"},"source_url":"https://seekingalpha.com/article/4698829-super-micro-computer-liquid-cooled-supercluster-growing-in-ai-era-initiate-with-buy","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2442672556","content_text":"Super Micro Computer offers liquid-cooled AI superclusters in partnership with major GPU players like Nvidia, AMD, and Intel.Supermicro's strong product pipeline optimized for data centers positions it for rapid growth in the AI computing era.Anticipated revenue growth of 30%+ in the near term, leading to a 'Buy' rating with a one-year price target of $900 per share.Erik IsaksonSuper Micro Computer (NASDAQ:SMCI) offers liquid-cooled AI superclusters, in partnership with major GPU players including Nvidia (NVDA), AMD (AMD) and Intel (INTC). Supermicro has a strong product pipeline optimized for the entire computing stack in data centers. Given the rapid growth in AI computing, I anticipate Supermicro will continue its rapid growth in the near term. I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.Robust Liquid-Cooled AI Superclusters PortfolioSupermicro has advanced power management solution by increasing rack KW density with direct liquid cooling technology. There are several reasons why Supermicro is gaining popularity in the AI computing era:Liquid cooling technology enables hyperscalers to reduce the energy consumptions, making these superclusters favored by hyperscalers and AI operators. According to IEA, global data center electricity consumption in 2022 was around 1-1.3% of global final electricity demand. However, global data center energy consumption has risen rapidly in recent years, and is expected to continue to increase due to AI computing. Data center operators have a strong incentive to reduce their energy bills. During the recent earnings call, Supermicro’s management disclosed that the liquid cooling technology can save 40% of total energy costs for data centers, which is quite significant.IEA ReportAs illustrated in the slide below, Supermicro provides total IT solutions for data centers including software, hardware and services, and these racks provide plug-and-play solutions for data centers. The turkey solution includes servers, storage, blades, workstations, full rack scale solutions, networking devices and other software/hardware solutions.Supermicro Investor PresentationSupermicro has a broad range of liquid-Cooled AI superclusters. In June 2024, they introduced Rack Scale Plug-and-Play Liquid-Cooled AI SuperClusters for NVIDIA Blackwell and NVIDIA HGX H100/H200 and several more Superclusters are coming soon including Supermicro NVIDIA HGX B200, Supermicro NVIDIA HGX B100/B200 and Supermicro NVIDIA GB200 NVL72 or NVL36. In addition, Supermicro announced its IT solutions based on Intel’s Xeon 6700-series processors with E-cores. These innovative superclusters could potentially help Supermicro gain more market share in AI data center market.Recent Result and FY25 OutlookOn April 30th, Supermicro released its Q3 FY24 result, with 200% growth in revenue and 290% growth in adjusted operating income. My biggest takeaway from the quarter can be summarized as follows:Supermicro continues to lead in NVIDIA HGX H100 SuperCluster solutions, and the management claimed that the solution offers 2-3 times higher power density compared to traditional racks from its competitors.Supermicro has a rich portfolio roadmap, including upcoming AI racks for NVIDIA H200, B100, B200, GH200 and GB200 GPUs as well as Intel Gaudi2, Gaudi3 and AMD MI300X and MI300A GPUs. These new solutions can support both air cooling and DCL cooling technologies, paving a solid foundation for Supermicro’s future growth.Due to the strong performance, Supermicro raised the full-year revenue guidance to $14.7 billion- $15.1billion. I am considering the following factors for its near-term growth:With the rapid growth in AI computing, the GPU market is forecasted to grow at a CAGR of 33%+ from 2024 to 2029, according to a report by Mordor Intelligence. As Supermicro provides solutions for all the major GPU vendors, even without assuming any market share gains, Supermicro could potentially grow its revenue by 30%+ in the near-term.Mordor IntelligenceGPU power consumption is reaching 700-1000 watts, as shown in the table below. The increasing power consumption requires advanced cooling technology on the thermal side. The advancement of GPU computing powers could potentially stimulate the industry adoption of premium cooling technology. Consequently, Supermicro could benefit significantly from this technology trend.Tom's Hardware ReportOverall, I am quite comfortable that Supermicro will grow its revenue by more than 30% in FY25.ValuationAs Supermicro has already delivered strong growth over the past three quarters, I don’t anticipate its revenue growth will deviate much from its guidance for FY24; therefore, I assume 110% revenue growth in FY24 in the DCF model.As analyzed previously, I estimate Supermicro will deliver 30%+ growth in the near-term. As AI investment gradually shifts from training to inference in the future, the overall growth in data centers could potentially decelerate. At the AI inference stage, more AI related demands would be at the edge side, including edge networking, AI PCs, AI smartphones etc.As such, I assume Supermicro’s revenue growth will decelerate to 20% from FY27, then to 15% from FY29 and to 10% from FY31. That said, I am still optimistic that Supermicro can deliver 30%+ revenue growth in the next three years.On the margin side, the primary driver will be the gross profit leverage. Supermicro has been reallocating its manufacturing facilities over the past few years. More specifically, the company has shifted more manufacturing to Taiwan, and they are building a new facility in Malaysia. As indicated in a recent conference, the management was quite confident in reducing manufacturing costs in the future. To be conservative, I only assume 10bps annual margin improvement in the DCF model. After all, Supermicro is a hardware manufacture, which typically carries lower margin than software and platform vendors.Supermicro DCF - Author's CalculationsThe free cash flow from equity is calculated as follows:Supermicro DCF - Author's CalculationsThe cost of equity is calculated to be 16.8% assuming: risk-free rate 4.2% (US 10Y Treasury); Beta 1.8 (Seeking Alpha); equity risk premium 7%.Discounting all the future FCFE at a 16.8% discount rate, the one-year price target is calculated to be $900 per share.RisksRelated Party: Ablecom, a company based in Taiwan, is one of the major contract manufacturers for Supermicro. Ablecom’s CEO, Steve Liang, is the brother of Charles Liang, Supermicro’s President, CEO and Chairman of the Board. Charles Liang and his spouse own 10.5% of Ablecom’s capital stock as of June 30, 2023. Additionally, Compuware is one of Supermicro’s major distributors. Compuware’s CEO, Bill Liang, is the brother of Steve Liang and Charles Liang. From an audit perspective, this presents a corporate governance issue, as investors’ interest might get eroded by these internal transactions.Relationship with China: Although China represents <1% of total revenue, Supermicro owns 30% of a corporate venture in China, with another Chinese company owning 70%. It is uncertain whether Supermicro will expand its business in China or continue the corporate venture in an indirect way.Competition from Dell (DELL) and Hewlett Packard Enterprise (HPE): Both Dell and HP are developing their own liquid-cooling AI servers. As both companies own a significant market share in the traditional server market, investors should not underestimate the competition in the AI server market.VerdictI favor Supermicro’s leading liquid cooling technology in data center market, potentially reducing energy bills by 40%. The rapid growth in data center will continue driving Supermicro’s growth in the near-term. Supermicro is well poised to partner with all the major GPU manufactures and ride the tide of AI computing. Therefore, I am initiating with a ‘Buy’ rating with a one-year price target of $900 per share.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":0,"commentSize":1,"repostSize":1,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":false,"deviceId":"web-server-community-laohu8-v3","version":"4.26.0","shortVersion":"4.26.0","platform":"web","vendor":"web","appName":"laohu8","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2442672556"}