Super Micro Soars on AI Chip Demand Despite Big Tech Competition

Super Micro Computer is benefiting from huge demand for AI and accelerated GPU chips, through its partnership with Nvidia. Revenue grew 37% in 2023 due to this demand.

Strategic partnerships with GPU/CPU players like Nvidia, Intel, and AMD give Super Micro first-mover advantage in full-rack solutions for AI data centers.

Margins jumped from 15% to 18% for gross margin and 4% to 11% for operating margin in 2023 due to higher average selling prices.

Competition from giants like Dell, Cisco, and Lenovo remains a risk, as they can scale and produce cheaper.

At 17X forward P/E, SMCI offers good value given 29% expected 3-year profit growth. Buy on dips like today's 7% drop, with 2-year target of 50-60% upside.