From Nasdaq: 2024-05-15 04:50:00

Super Micro Computer (NASDAQ: SMCI) has seen its shares rise over 2,000% in the last three years due to the demand for high-performance chips used in AI applications. While Supermicro has a strong relationship with Nvidia, its competition includes Dell, IBM, and others in the integrated systems market.

Supermicro’s revenue and earnings per share projections are impressive as AI continues to grow. However, its focus on IT architecture indicates a low-margin hardware business with rising capital expenditures impacting operating margins. The company’s premium valuation compared to peers raises questions about sustainability in the long run.

Investors considering Supermicro may want to monitor its competitiveness in the evolving GPU market. With increasing competition from AMD, Intel, and big-tech companies developing proprietary chips, Supermicro might face challenges in expanding margins and cash flow. The chip space presents opportunities, but investors seeking steady growth may look elsewhere for investments.



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