Chip industry focus turned to Nvidia’s GTC event this week where the semi giant unveiled its Blackwell GPU architecture, with the platform being able to attain 4x faster training and 30x faster inference vs. Its previous generation H100 chips.
It’s tempting to think a Super Micro Computer (NASDAQ:SMCI) representative was in attendance sending messages back to HQ, as immediately following the reveal, the server and storage systems specialist announced a range of matching AI server products. A host of GPU-optimized SMCI systems will be prepared for the B100, B200 and GB200 designs, with several of the SMCI systems being liquid-cooled.
Getting its products to market at a brisk pace remains SMCI’s core strength, per Barclays analyst George Wang. “We continue to highlight time to market as the strongest moat for SMCI,” the analyst said.
“We think the AI strength is still in an early innings and it is too early to take a cautious view at this point. As NVDA increases the new product launch cadence of now once a year, vs. once every other year in the past, it should structurally increase SMCI’s advantage as SMCI will have a list of matching server products ready immediately and offer design assistance after NVDA/AMD/INTC announce a new silicon product, vs. a much longer development cycle for competitors,” Wang added.
SMCI is also expected to benefit from capturing the increased ASPs (average selling prices) of the new generation silicon and server products. Reports from the supply chain suggest a potential 40% increase in average selling prices for the B100 compared to H100 chips.
Meanwhile, SMCI also announced a 2 million share secondary offering, with Wang reckoning the company could see net proceeds of $2 billion. While shares slipped in the aftermath as they usually do in the wake of stock diluting acts, Wang thinks it was a good idea.
“We view the equity offering as a positive signal despite LSD (low single digit) dilution,” he opined. “SMCI is expected to use the net proceeds for working capital and inventory needs as well as R&D, likely preparing for substantial orders from hyperscale CSPs in coming months, in our view.”
All in, Wang rates SMCI shares an Overweight (i.e., Buy), to go alongside a $961 price target. However, the analyst should consider revising this target upward, as it currently implies that shares will remain flat from their current levels. (To watch Wang’s track record, click here)
The Street’s average target is a touch higher, and at $983 factors in one-year returns of a modest 1.5%. Rating wise, based on a mix of 6 Buys and 3 Holds, the analyst consensus rates the stock a Moderate Buy. (See SMCI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
