Nvidia's Lead in AI Chips Makes It a Better Buy Than Server Maker Supermicro
-
Nvidia makes the GPUs needed to power AI systems, while Supermicro assembles the servers that house these GPUs. They are complementary businesses.
-
Supermicro depends heavily on its partnership with Nvidia, while Nvidia has a more diversified business. This skews the investment thesis toward Nvidia.
-
Supermicro was previously undervalued compared to Nvidia, explaining its huge stock run-up. But with higher valuations, Nvidia is now the better buy.
-
Nvidia is significantly more profitable than Supermicro due to controlling the key GPU technology. Higher margins make Nvidia more attractive.
-
The AI buildout will lift both companies, but Nvidia's superior margins, diversification, and control of the core technology make it the better investment choice overall.