Carlsquare/Vontobel weekly trading note: SMCI an interesting but risky AI case
April 10, 2024 at 02:56 am EDT
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This week's case is Super Micro Computer, where we have seen a recent surge in the share price due to its exposure to increased demand for storage and server solutions to secure big data for AI. We believe this will increase volatility in the share price ahead of its Q3 2024 report, due on 29 April 2024. The S&P500 Q1 2024 earnings season kicks off this week with some of the major US banks reporting on Friday 12th April.
As the demand for high-performance computing increases amid the trends of AI, big data and cloud computing, Super Micro Computer (SMCI)'s rapid adoption of new chip technologies gives it a competitive advantage. This was evident in a strong Q2 2024, with revenues doubling compared to Q1 2024. SMCI's share price has soared in 2023 and is up 255.3% in 2024. This is likely to lead to increased volatility in the SMCI share price until the Q3 2024 report is released on 29 April.
The S&P500 Q1 earnings season kicks off this week with some of the major US banks reporting on Friday 12th April. Analysts' earnings expectations for Q1 reports have been lowered since 31 December 2009.
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Super Micro Computer, Inc. specializes in the design, manufacture and marketing of high-performance server and storage systems, based on an innovative, modular and open architecture. Net sales break down by family of products as follows:
- servers and data storage systems (92.2%): accelerated computing platforms made up of a combination of servers and storage systems, designed for data centers, cloud computing, enterprise computing, Hadoop/Big Data, high-performance computing, artificial intelligence, 5G/IdO/Edge technologies and embedded systems. The group also offers server management and security software solutions, as well as professional services;
- modular server subsystems and accessories (7.8%): server boards, enclosures, processors, motherboards, power supplies, adapters, switches, networking systems, cables, ventilation systems, etc.
At the end of June 2023, the group has 3 production sites located in the United States, the Netherlands and Taiwan.
Net sales are distributed geographically as follows: The United States (67.9%), Asia (14.7%), Europe (14.1%) and others (3.3%).
SUPER MICRO COMPUTER, INC. 
