Where will supercomputer stocks be in 5 years?

Super Microcomputer (NASDAQ resonance code: SMCI) (used form a nominal expression)The stock price has risen more than 4000% in the last five years. For early investors (math.) genusinvestment Super Microcomputer has changed their lives. To put this in perspective, a $1,000 investment in mid-2019 is now worth $41,000 but (not)Standard & Poor's 500 The index is only 1,760 Dollars.

But can the Silicon Valley hardware company continue to make a splash in the marketplace as the AI-related hype recedes into basic flour? Let's take a deeper look at what might happen in the next half-century.

Rebound based on the basic noodles

Like the California Gold Rush of the 19th century. Artificial Intelligence (AI) The megatrend boosted the "鎬和鏟" companies selling hardware more than it boosted the customers of the曏 consumer (metaphorically speaking, the juggler). Although Super Micro is not as popular as its name partners Nvidia) That's how you design and build an AI training chip. (math.) genusBut it helps convert these products into energy-efficient servers for use by its customers in data centers.

Q2 financial results highlighted the tremendous growth in demand for Supermicro's hardware. The company's net sales more than doubled year-over-year to $3.66 billion and profits grew 68% to $296 million as existing and new customers clamored for more AI-optimized computing platforms.

Supermicro and Graphics Processor (GPU) maker Nvidia. Maintains close working relationship with the person The latter provides Supermicro with a quota for chips used in the manufacture of computers. New GPUs like the Nvidia GB200 (expected this year) could lead to another surge in demand from Supermicro's data center customers. The company is also releasing more GPUs based on Nvidia's competitors. AMD Products for Chips (math.) genusThis would help to diversify the supply chain and reduce possible shortages.

What could go wrong?

The AI hype won't last forever, so Supermicro's customers will have to start generating earnings and cash flow to justify their continued spending on expensive AI GPU chips and compute servers. Due to Supermicro's low level of diversification economic moatrelative flimsyThis challenge is particularly pressing for Supermicro. The

As mentioned earlier, Supermicro does not design AI chips. Instead, it draws on innovations from Nvidia and other companies.

This intermediary status may expose the noodles to the risk of being attacked from the outside. Dell TechnologiesProfit-destroying competition from competitor server manufacturers such as The latter could erode its GPU allocation or customer base. Supermicro's gross margin fell to 15.4% in the second quarter from 16.7%, which illustrates its weak position in the market. Nvidia's gross margin rose from 74% to 76% during the same period.

Is Supermicro's stock worth buying?

The next five years will present many opportunities and challenges for supercomputer companies. As the AI hype dies down, this will be a period of liquidation for AI, and companies will have to prove that they can turn this new technology into a sustainable and profitable business. But as a server maker, Supermicro can't control the chip supply or the industry's consumption 耑, which will determine its future.

As far as possible. Considering its triple-digit growth rate, Super Micro corporatefar away Price/Earnings Ratio (P/E) At only 30, it is still relatively affordable. Moreover, this discount button seems to have taken into account the uncertainty of future demand.

While I would like to see more signs that AI is moving from a practical novelty to a major profit margin driver for companies, I still think the stock is worth buying.

Should you invest $1,000 in SuperMicro now?

Consider this before you buy shares of Super Micro Computer:

Motley Fool Stock AdvisorA team of analysts have just selected what they believe to be the most popular analysts in the world at the moment.-est (superlative suffix)Worth investing in10Only ...... and SuperMicroComputers are not among them. The 10 stocks that made the list are poised to bring huge returns in the years to come.

Stock AdvisorIt provides investors with an easy-to-understand blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. Since 2002, StockAdvisorThe service has more than doubled the return on the S&P 500 Index.

View 10 stocks only

*Stock Advisory Rates as of April 15, 2024

Will Ebiefung does not own any of the stocks mentioned above. the Motley Fool holds recommended Advanced Micro Devices and Nvidia. the Motley Fool has a disclosure policy.

Where Will Supercomputer Stock Be in 5 Years? This post was originally published by The Motley Fool.