By Akash Sriram
(Portal) – Shares of Super Micro Computer jumped about 25% to a record high on Friday after the company forecast quarterly results well above its current estimates on strong demand for artificial intelligence servers.
The company is also seeing increasing demand for its liquid cooling solutions in data centers that handle more generative AI applications.
“We speculate that the company's upside will depend significantly on earlier-than-expected hyperscale projects to rapidly deploy liquid-cooled racks, which are unique to Supermicro's area of expertise,” Hans Mosesmann, an analyst at Rosenblatt Securities, wrote in a note.
The bullish estimates from Supermicro, which counts NASA and Japan's NEC among its customers, follow chipmaker Taiwan Semiconductor Manufacturing Co's bullish statement on AI on Thursday, which sparked a global rally in chip stocks.
At $387.90, the company is expected to add more than $4 billion to its $17.3 billion market cap as of last close.
San Jose, Calif.-based Super Micro now expects net sales of between $3.6 billion and $3.65 billion for the quarter ended Dec. 31, compared with its previous forecast of $2.7 billion to $2.9 billion -Dollar.
The data center infrastructure company raised its second-quarter adjusted earnings forecast to $5.40 to $5.50 per share from $4.40 to $4.88.
Supermicro's 71% sequential growth significantly exceeds the growth of the GenAI market, which was estimated to be about 41% in the December quarter compared to the previous three-month period, said Nehal Chokshi, analyst at Northland Securities.
Supermicro's shares have more than tripled since May last year, when CEO Charles Liang said generative “AI dynamics have helped Super Micro a lot.”
The forward price-to-earnings ratio – a common measure of stock value – is 16.22, compared to 7.58 for Hewlett Packard Enterprise and 16.72 for International Business Machines.
(Reporting by Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila)