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More on Super Micro Computer (SMCI)

February 2, 2024

This is one of the most stunning chart breakouts I have seen in years. The best breakouts are explosive and this is all of that; the shares have just erupted out of the blocks into an uptrend which could still be in its early days. A new feature in the chart is that the latest price shows the latest price, duh, but also the price when I last featured the chart.

The fundamentals are equally explosive.

I’m delighted to share our second quarter results, which show a record-breaking performance for Super Micro. We achieved revenue of $3.66bn, a 103pc increase from last year, and earnings per share of $5.59. This is our first quarter ever with over $3bn revenue. More importantly, this single quarter’s revenue surpassed our annual revenue for 2021. This fantastic quarterly result was driven by strong demand and improving supply conditions for GPU and related key system components.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

Below is a repeat of a quote I have already published but it is one to savour.

The exciting news is that, finally, we are entering an accelerating demand phase now from many more customer wins. To support faster growth, we have increased our working capital recently by raising about $600m with an equity offering. Moreover, we have other programs to increase our cashflow without additional equity dilution to support short and long-term sustainable growth. Overall, I feel very confident that this AI boom will continue for another many quarters, if not many years. And together with the related inferencing and other computing ecosystem requirements, demand can last for even many decades to come, we may call this an AI revolution.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

I am an ignoramus when it comes to technology but even I can tell that SMCI is at the cutting edge of the AI revolution.

Supermicro is at the forefront of the AI revolution, where the pace of innovation is accelerating. We are leading the race by developing the most innovative AI infrastructure on many platforms at rack scale, for almost any industry, and for any market vertical. As the market leader, we have been preparing to more than double the size of our current AI portfolio with the coming soon NVIDIA CG1, CG2 Grace Hopper Superchip, H200 and B100 CPUs — GPUs, L40S Inferencing-optimised GPUs, AMD MI300X/MI300A, and Intel’s Gaudi 2 and Gaudi 3. All these new platforms will be ready for high volume production in the coming month and quarters.

Moreover, we are adding further optimised new architectures for the upcoming NVIDIA GPU product lines. Our AMD MI300X systems are sampling now, and our Intel Gaudi 3 system is coming soon. More importantly, we are continuing to invest and innovate in data centre and enterprise liquid-cooling technology to make sure these high-power AI platforms are in line with our green computing methodology, while improving the performance, efficiency, and reliability of systems in a data centre.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

It is insane what is happening in this business.

The rapid growth of our business is driving the need for additional R&D, solution optimisation, manufacturing and service capacity. Today, our production utilisation rate is about 65pc across our USA, Netherlands and Taiwan facilities, and they are quickly filling. To address this immediate capacity challenge, we are adding two new production facilities and warehouses near our Silicon Valley headquarters, which will be operating in a few months. The new Malaysia facility will focus on expanding our building blocks with lower costs and increased volume, while other new facility will support our annual revenue capacity above $25bn.

To summarize, our record quarterly performance demonstrates our Building Block rack scale plug-and-play IT and AI industry leadership, which continues to accelerate and shows signs of strong market share gains. The continued strength of existing customer builds and ramp of newly acquired customers, and the robust pipeline of new products coming in 2024 gives me confidence that fiscal Q3 revenue will be in the range of $3.7bn to $4.1bn.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

This is a business in blast-off mode.

Additionally, we are expecting continued strength for the second half of fiscal 2024, and now forecast revenue for the full fiscal year ending in June to be in the range of $14.3bn to $14.7bn. We are in overdrive to accelerate Supermicro 3.0 business model with this AI boom. In the meantime, we are preparing ourselves for the next phase of Supermicro business growth with Supermicro 4.0 and its expanding TAM. Now is certainly the most exciting time yet for Supermicro.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

Strategy – Buy into a Kamikaze Plus Classic

The shares have risen so far so fast they could react any time. Buy some now and If they do react buy more. Opportunities like this one don’t come along very often.

Share Recommendations

Super Micro Computer. SMCI. Buy @ $583

I am beginning to understand that SMCI is all about green computing.

Yeah, again, we see, we recommend green computing everywhere. That’s why wherever, whenever we can help a customer at base, we will. That’s why we have been building really large-scale capacity for liquid cooling and other green computing solutions. So yes, that capacity will be huge, but its capacity there, when customer need, we are ready. And indeed our facility also very flexible. Lots of facility can support liquid cooling and air cooler, or combination cooling. So yes, we have a huge capacity ready for growth, but not necessarily all for liquid cooling, they support air cooler or combination hybrid cooling as well.

Charles Liang, CEO, Super Micro Computer, Q2 2024, 29 January 2024

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