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Adam ..it’s very interesting reading your posts here and then reading what information is featured on line etc …just seen one this morning from Alpha whose headline was …SMCI un investable is an understatement….polar opposites….must really frustrate and annoy you
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It doesn't annoy me :). I'm used to seeing such articles. Written by attention seekers(and paid by others to write it) who have been consistently wrong on the industry and AI's obvious potential. This author wrote a scathing article on Broadcom in September 24 when the stock was $160(SELL rating)-months later the stock was $250. Called Apple a 'disaster' in May 2024($175) and the stock went on to $260 and issued a SELL report on Twilio in Dec 2022 when the stock was $48. Twilio exploded from that date to $150-We sold at $140 btw.
The common denominator with these 'experts' is they churn out copious amounts of 'research'. Research is defined as 1 hour to formulate a narrative to support their, usually paid-for negative opinion. And that is what you need to understand. Most of this garbage is produced at the request of someone short. Someone with an agenda.
Remember when at last Earnings Jensen Huang said ‘now that Blackwell is out you won’t be able to give Hopper away’
This weekHuang said that, Supermicro got pinched by companies seeing Blackwell and Blackwell Ultra GPU systems, who didn’t cancel orders so much as push them out with the new and improved compute engines and interconnects that come with Blackwell machines.
In other words SMCI took a hit from that comment and Huang acknowledged it!
I think SMCI will be a big turn around story. I am quite sure they have XAi and Meta as customers, amongst others-there is some evidence they will supply the Stargate project. We know what these customers are spending. We know they want GB300 given its 40X increase in perf over GH200. I'm prepared to give them a couple of quarters to deliver that. This quarter should be good(June), September should be 'massive' (7-8B) and upwards significantly from there.
Given we are in @$26.50, there is a nice margin of safety
Edited to add: This investment in particular is classic Risk Vs Reward. Our risk is low, having already realised 200% so nobody can take that away from us, both literally and figuratively.
As everyone knows, with quarterly reporting, anything goes when you are dealing with a fast paced industry, an architecture (iterations) changing annually. Quarterly results will be clunky but the trend is quite clear.
You can not look at a headline gross margin and say 'it fell' = bad-well a financial illiterate will (my point) but what goes into 'gross margin' a whole lot of costs unassociated with the corresponding revenue. Factory improvement/depreciation, all factory labour cost and overhead, tooling. 20-30 million of costs plus $100M hopper provisions which may reverse. The company is spending a lot of money preparing for the big roll out. Given where we sit today, they now deserve a couple of quarters to show us their hand.
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Breaking news:
DataVolt Announces Landmark Deal with Supermicro to Accelerate Adoption of Rack-Scale Total Liquid Cooling IT Solutions for Future-Ready AI Data Centres
This announcement details a significant multi-year partnership between DataVolt, a Saudi Arabian data center company, and Super Micro Computer , a U.S.-based leader in energy-efficient server solutions. The agreement, valued at $20 billion, aims to accelerate the delivery of advanced GPU platforms and rack systems for DataVolt’s hyperscale AI campuses in Saudi Arabia and the U.S. Key points include:
Strategic Alignment: DataVolt’s CEO, Rajit Nanda, highlighted the favourable business environment fostered by the Trump Administration and Saudi Arabia’s Crown Prince Mohammed bin Salman, emphasising renewable energy and net-zero green hydrogen power paired with cutting-edge server technology.Sustainability and Scale: The partnership leverages U.S.-made supply chains for GPU systems, enabling DataVolt to scale its investments while prioritizing sustainability.
Innovation Hub: Supermicro’s CEO, Charles Liang, emphasised the collaboration’s role in advancing AI and compute infrastructure, supporting Saudi Arabia’s ambition to become a global technology hub.
Take away: We spoke about their efficiency and the fact that they are the only US rack scale manufacturer which would have benefits. Great news for Supermicro. It's a huge endorsement for their best in class systems and will it be the first of many 'Saudi-region' deals.
The stock is $42 in Pre-market
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Alpha maybe eating humble pie this week
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Talk about eating a foot sandwich-timed to perfection.
The over riding facts which only a fool would ignore are:
SMCI make the best racks bar none, using a system that is in very high demand now and will soon be indispensable. If you aren't using DLC you aren't making a viable data centre. Anyone who says AI racks are a commodity and 'anyone can build them' is talking out of their rear. Efficiency matters when you're burning $2M/day in power costs. A current NVL-72 is hoovering 130KW/hr, even at 12c/kwh thats $16/rack per hour or $384/day. Musk will scale to 1 million chips within 8 months(Xai)-thats $5.3M per day in power. If you can buy a rack which saves up to 40%(power) don't you think it will be a strong proposition. Clear some have different views but there is an idiot born every minute.
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The company has confirmed this week:
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Increased DLC monthly capacity to 3,000 racks. Up from 2,000 in December. It's worth noting these are currently $3-$4M racks and will soon be 5-6M with GB300.
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By December they will have $50B revenue run rate (capacity).
But it's not enough! NB: A new Saudi facility is approved, clearly a strong signal of many more projects in the pipe line.
Plans.
Silicon Valley Green Computing Park (B20-B23)
Rack-scale integration with liquid coolingDatacentre BBS and cloud services-this part of SMCI 4.0 which will be discussed in detail next week at Computex.
APAC Science and Tech Centre (B62)
New land under negotiation for B63Supermicro Malaysia Campus with partners
High-volume subsystem and rack-scale production onlineFuture site plans
New Silicon Valley facilities in progress (B31, B32)New Silicon Valley facility in progress (#1081, Milpitas)
New BV (Netherlands) production facility in progress
New US site in plan – East Coast
New Saudi Arabia and other international sites in plan
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The future is bright …the future is SMCI…looking exciting and good for the share price
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clearly they are planning for way beyond $50B annual run rates.
Not speculation-they are Nr 1 in Generative AI systems and their AI side of the business grew 500% YoY.I want to see them return to a tax paid Net margin of 10% min. I think with scale and DCAAS (DC as a service) they will. But I work off of, say $50B = $5B net
