Super Micro Computer (NASDAQ: SMCI) has been making headlines recently, with the company’s stock rallying 7.2% in Monday trading. Last week, the server specialist experienced a dip in its share price following its fiscal fourth-quarter earnings report. While the report showcased strong revenue growth, it also revealed a decline in margins.
However, Supermicro and other AI-related stocks are bouncing back today, following a recent sell-off in the sector. One of the factors contributing to this bounce is the spotlight on the company’s new direct liquid cooling (DLC) products in a recent weekend Wall Street Journal article.
The Aug. 6 earnings report from Supermicro indicated a near-100% revenue growth forecast for the upcoming year, surpassing analyst expectations. The company attributed the near-term decline in margins to expedited shipping costs for direct liquid cooling components, driven by high demand for these solutions.
The Wall Street Journal feature on DLC technology highlighted Nvidia’s upcoming Blackwell chip, which will require liquid cooling when integrated into a GB200 server. While there were concerns about a delay in the chip’s release, analysts have suggested that any postponement would likely be minimal.
Additionally, the article mentioned issues with DLC testing at some of Supermicro’s Asian competitors, indicating potential opportunities for Super Micro Computer to capitalize on its first-to-market DLC solutions.
During a recent conference call, Supermicro revealed that it had already shipped a significant number of liquid-cooled racks, demonstrating the company’s strong position in the DLC server market. With Supermicro accounting for a majority of DLC servers shipping today, the company appears well-positioned for growth.
Despite recent market fluctuations, there is no indication that AI investment is slowing down. Major tech companies have expressed their commitment to increasing AI investment in the coming years, presenting an opportunity to invest in AI winners like Super Micro Computer at a potentially discounted price.
While Super Micro Computer may not have been included in the Motley Fool Stock Advisor’s list of the 10 best stocks for investors to buy now, the company’s innovative DLC solutions and strong market position make it a compelling option for investors seeking exposure to AI-related technologies.
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