Super Micro Soars on GPU Demand But Faces Risks Relying on Nvidia and AMD
• Super Micro Computer works closely with Nvidia and AMD, supplying server racks and storage for their GPUs which are used in AI computing. Its revenue has surged along with demand for GPUs.
• Super Micro's stock price has moved in parallel with Nvidia's over the past year. This brings risk as it may be overvalued based just on its Nvidia relationship.
• Super Micro trades at a much higher valuation based on price-to-sales ratio compared to other IT infrastructure companies like IBM and HPE.
• Reliance on Nvidia and the GPU market brings risk if demand declines in the future. Diversifying relationships would make Super Micro's business more resilient.
• While Super Micro enables Nvidia's chips, it is ultimately a different kind of business than a semiconductor manufacturer like Nvidia, with different growth prospects and risks.