3 Reasons Why SMCI Stock Could Still Be a Buy

Core Insights - xAI, founded in 2023, aims to compete with AI leaders like OpenAI and Google, leveraging partnerships with Dell Technologies and Super Micro for essential hardware [2] - Super Micro is positioned to capture a larger share of the AI server market, with potential for margin growth, presenting a bullish investment thesis [3] - The company is expected to see significant revenue growth, with projections indicating a doubling of revenue and earnings in 2024 [5] Company Performance - Super Micro's stock has gained investor interest due to its strong position in the AI server market, with over half of its revenue derived from AI GPU platforms [17] - In Q4 2023, Super Micro reported a 37% increase in revenue and a 115% rise in earnings, primarily driven by AI server sales [19] - The company anticipates a 110% revenue increase in 2024, despite challenges in gaming GPU sales and data center chip demand [19] Market Dynamics - Super Micro's partnership with Nvidia is crucial for accessing high-end GPUs, while also integrating AMD's GPUs to diversify its offerings [9] - Nvidia holds an 88% market share in GPUs, but Super Micro aims to leverage its partnerships for substantial market expansion [21] - The demand for AI technology is expected to drive Super Micro's growth, with revenue projected to rise by 58% until 2026 [13] Strategic Developments - Super Micro has expanded production in Malaysia, Taiwan, and Silicon Valley to meet increasing demand, utilizing next-gen Intel XEON and AMD Turin platforms [11] - The company recently unveiled its SuperCluster lineup, capable of supporting up to 512 Nvidia GPUs, which could lead to significant expenses exceeding $20 million in GPU costs [14] - Following Elon Musk's announcement regarding the supercomputer project, Super Micro's stock experienced an increase of over 8% [18]