Core Insights - Cisco Systems and Dell Technologies are leading providers of AI-powered enterprise infrastructure solutions [2][3] - The demand for AI infrastructure is driving significant growth in both companies, with Cisco securing over $1 billion in AI infrastructure orders and Dell shipping $1.8 billion in AI servers in Q1 [9][13] - IDC projects AI infrastructure spending to exceed $200 billion by 2028, with a significant portion allocated to servers with embedded accelerators [4] Company Performance - Cisco's stock has appreciated 16.2% year to date, while Dell's shares have increased by 11% [5] - Cisco's security business is thriving, with strong demand for its security solutions and a growing customer base [11][12] - Dell's PowerEdge XE9680L AI-optimized server is in high demand, contributing to a healthy backlog of $14.4 billion [13] Market Trends - Global IT spending is forecasted to reach $5.61 trillion by 2025, with data center systems expected to grow by 23.2% [4] - Enterprises with large-scale hyperscale data centers will account for over 70% of spending on AI-optimized servers by 2025 [4] Valuation and Investment Appeal - Dell Technologies is considered undervalued with a Price/Sales ratio of 0.81X compared to Cisco's 4.61X [18] - Dell holds a Zacks Rank 1 (Strong Buy), while Cisco has a Zacks Rank 3 (Hold), indicating a stronger investment appeal for Dell [21][22]

Core Insights - The server market is projected to experience significant growth driven by artificial intelligence, with revenues expected to grow at a 25% annual rate from 2024 to 2030, while unit shipments will increase at a 7% annual pace [1][10]. Company Insights - Dell Technologies is identified as a major beneficiary of the rising AI server demand, with an AI server backlog of $14.4 billion as of the first quarter of fiscal 2026, and projected AI server revenue growth from $9.8 billion in 2024 to over $44 billion by 2027 [5][6]. - Hewlett Packard Enterprise is also expected to benefit significantly, with AI server revenue projected to grow from $4.5 billion in 2024 to $20 billion by 2027, and an APU backlog of $3.2 billion at the end of the second quarter of fiscal 2025 [7]. Market Dynamics - AI server revenues are anticipated to grow at a 28% compound annual growth rate (CAGR) from 2024 to 2030, outpacing the overall server market growth of 25% CAGR, while non-AI server revenues will grow at about 4% annually [3]. - AI server unit shipments are expected to increase at a 15% CAGR, compared to total server units growing at a 7.2% annual rate during the same period [4]. Product Segmentation - Early AI-related demand is expected to focus on mid-range and high-end training servers, with inference server demand rising in later years, primarily in the mid-range segment [11]. - Volume servers priced below $10,000 are projected to grow at a 5% CAGR, while mid-range server units will grow at a 19% CAGR, and high-end server units will grow at a 39% CAGR, driven by the need to train AI models [12]. Competitive Landscape - The server industry is expected to face pressure on profit margins due to intensifying competition, with operating margins likely to remain in the low-to-mid single digits in the near term [9]. - Newer GPUs, such as Nvidia's Blackwell, require significant power, leading to the integration of liquid cooling systems, which currently command premium pricing but are expected to see price reductions over time [8].

Group 1 - BofA Securities has resumed coverage on Super Micro Computer (SMCI) with an 'Underperform' rating and a price target of $35, indicating a potential downside of approximately 28.5% from current levels [1] - SMCI stock closed at $49.11 on July 8, reflecting a 4.25% gain from the previous session, but experienced a 1.34% decline in premarket trading [2] - Despite BofA's bearish outlook, the broader Wall Street sentiment is more optimistic, with a "Moderate Buy" consensus based on 13 analysts' price targets, including 6 Buy ratings, 6 Hold ratings, and 1 Sell rating [3] Group 2 - The average 12-month price target for SMCI is $41.42, suggesting a potential downside of 15%, with forecasts varying from a high of $70.00 to a low of $24.00 [5] - Super Micro is projected to achieve strong revenue growth, with sales expected to increase nearly 48% to $22 billion in FY'25 and continue growing by 35% to approximately $30 billion in FY'26 due to robust data center spending [6] - The company's close ties to Nvidia's GPU ecosystem position it favorably to benefit from the upcoming Blackwell GPU ramp, although margin pressures from costly liquid-cooling systems and heightened competition may impact profitability in the near term [7]

Group 1 - Dell is primarily known for its laptops, but its servers are also a significant product line, especially with the rising demand for AI servers and AI PCs [1][3] - Over the past 30 years, Dell's revenue has shown a continuous upward trend, nearing $100 billion, as the company has successfully navigated multiple technological waves [1][3] - The article discusses Dell's ability to sustain growth in a competitive PC market and its recent entry into the AI sector [3][4] Group 2 - Dell's evolution can be divided into four key phases: direct sales model, internet empowerment, crisis period, and transformation into a full-stack IT service provider [4][10] - The initial phase (1984-1990) focused on a direct sales model that reduced operational costs by 15%-20% and improved response times to 72 hours [5] - The expansion phase (1991-2004) saw Dell leverage the internet, increasing daily online sales from $1 million to $50 million by 2000 [6][7] Group 3 - The crisis period (2005-2013) was marked by a loss of market share and a significant drop in profits, leading to the company's privatization in 2013 [8] - Since 2013, under the leadership of founder Michael Dell, the company has transformed into a comprehensive IT service provider, acquiring EMC for $67 billion in 2016 [10] - Dell's core business is now divided into Client Solutions Group (CSG) and Infrastructure Solutions Group (ISG), with a near 1:1 revenue split between the two [10][11] Group 4 - Dell's server business is currently a focal point, with expectations that AI servers will account for about 20% of ISG revenue [13][16] - The server industry chain includes upstream components like GPUs and CPUs, with Dell positioned in the midstream as a manufacturer and integrator [16][18] - Dell holds the top position among brand manufacturers in the server market, but only commands a 7.2% market share [20] Group 5 - The server market is projected to grow from $306.7 billion in 2024 to $608 billion by 2029, with a compound annual growth rate (CAGR) of 13.5%, driven by AI server demand [31] - AI servers are expected to see a 15.6% CAGR, with their market share increasing from 14% to 25% by 2029 [35] - Dell's AI server revenue is anticipated to reach nearly $10 billion in 2024, benefiting from its deep partnership with NVIDIA [39]

Core Viewpoint - The one-machine market is facing challenges with a lack of new customers and returning clients, leading to a shift in focus towards mid-to-low-end models and a more cautious market approach [2][3][9]. Group 1: Market Dynamics - A recent tender from a state-owned enterprise in Guangdong highlights the unclear demand for one-machine products, with only a few repeat orders from existing clients [2]. - The initial hype around one-machine products has diminished significantly within four months, with many manufacturers struggling to achieve sales despite having products listed [2][3]. - The market consensus indicates that the high-end model market is largely saturated, and future competition will focus on mid-to-low-end models [3]. Group 2: Sales Performance - In the first half of the year, leading hardware manufacturers experienced significant sales, with some reporting nearly 10 billion in revenue and monthly sales of over a thousand units [5]. - The price of one-machine products has increased, with some models seeing price hikes of around 10% within weeks, reflecting a supply-demand imbalance [5][6]. - Companies like Inspur reported a 165.31% year-on-year increase in net profit, driven by strong server sales [5]. Group 3: Customer Relationships - The success of leading manufacturers is attributed to established customer relationships rather than technological advantages, as many large clients have fixed procurement lists [6][7]. - The deployment of one-machine products is primarily driven by strategic needs, with clients focusing on hardware rather than software solutions [7][8]. Group 4: Future Outlook - The second half of the year is expected to see a shift towards a "guerrilla warfare" approach in the mid-to-low-end market, with companies needing to adapt to changing customer budgets and requirements [9][10]. - The demand for high-end models has decreased, with clients now more interested in cost-effective solutions and specific business needs [11]. - The market for one-machine products is becoming increasingly competitive, with new entrants facing challenges in gaining traction [13]. Group 5: Implementation Challenges - Many existing one-machine deployments are not being fully utilized, with clients struggling to see a return on investment [15][16]. - The gap between model capabilities and actual application needs is causing disillusionment among users, leading to a reassessment of the value of one-machine products [16][20]. - Successful implementation often requires a combination of different models and a deep understanding of client data, which many current deployments lack [19][21].

Group 1 - Supermicro plans to increase its investment in Europe, focusing on ramping up manufacturing of AI servers in the region [1][2] - The company currently has manufacturing facilities in the Netherlands and is considering expanding to other locations due to rapidly growing demand in Europe [2] - Global demand for AI servers is expected to continue improving over the coming years, indicating a strong market outlook [3] Group 2 - Supermicro's servers are equipped with Nvidia chips, which are essential for training and implementing large AI models [2] - The comments from Supermicro's CEO follow Nvidia CEO Jensen Huang's recent visit to Europe, where he signed infrastructure deals and encouraged the region to enhance its computing capacity [3]

Core Viewpoint - The AI server market is dominated by NVIDIA, with the emergence of ASIC servers as a significant competitor, indicating a shift in the industry landscape [1][6]. Group 1: Market Growth and Projections - The global server market is expected to grow at a CAGR of 3% from 2024 to 2026, approaching a size of nearly $400 billion by 2026, with AI servers being the main growth driver [1]. - AI server shipments are projected to maintain double-digit growth, while overall server shipments will see a slight slowdown, with a 4% year-on-year increase in 2024 [1]. - High-end GPU servers, particularly those equipped with 8 or more GPUs, are expected to see over 50% growth in 2025 and a low 20% increase in 2026 [1]. Group 2: NVIDIA's Product Launches - The GB200 server began mass shipments in Q2 2025, with expected shipments of approximately 7,000 units, increasing to 10,000 units in Q3 2025 [3][4]. - The GB300 server is set to enter mass production in Q4 2025, with expected shipments in the thousands [2][3]. - The introduction of the next-generation Rubin chip is anticipated to raise the average selling price (ASP) of high-end AI servers, enhancing market size and supply chain opportunities [1]. Group 3: Competitive Landscape - While NVIDIA leads the market, major cloud service providers (CSPs) like Amazon, Meta, Google, and Microsoft are advancing with their ASIC servers, which offer cost and customization advantages [6][7]. - NVIDIA's GB200 chip boasts a BF16 performance of 2250 TFLOPS, significantly outperforming competitors' offerings in terms of performance [10]. Group 4: Future Market Opportunities - Broadcom predicts that the market for custom XPU and commercial network chips will reach $60-90 billion by FY2027, indicating substantial growth potential in the AI server market [8]. - Marvell anticipates a 53% CAGR growth in its data center market from 2023 to 2028, further supporting the upward trend in AI server demand [8].

Group 1 - The core viewpoint is that North American large CSPs are currently the main drivers of AI Server market demand expansion, supported by tier-2 data centers and sovereign cloud projects in the Middle East and Europe [1] - It is estimated that AI Server shipments will maintain double-digit growth by 2025 due to demand from North American CSPs and OEM customers [1] - TrendForce has slightly revised down the global AI Server shipment growth for this year to 24.3% due to changes in international circumstances [1]

Investment Rating - Buy: Hon Hai, Wiwynn, Wistron, Gigabyte, ASUS, AVC; Neutral: Quanta, Inventec [8] Core Insights - The average year-over-year revenue growth for ten companies in the AI servers and AI PCs supply chain is expected to be +37% in June 2025, +27% in July 2025, and +18% in August 2025, driven by the ramp-up of AI servers and new product launches [1] - Rack-level AI servers are transitioning models, which may impact revenue growth in the second half of 2025 [1] - Geopolitical uncertainties are causing changes in end market demand, leading to a slower month-over-month growth forecast of -6% in June, -8% in July, and +2% in August 2025 [1] Company Summaries Hon Hai - Expected 2Q25 revenues to grow 17% YoY to NT$1,813 billion, driven by AI server demand and tariff-related consumption pull-ins [13] - May revenues were 6% below estimates, affected by slower customer pull-in momentum and negative exchange rate impacts [13] - Maintain Buy rating with a target price of NT$242 based on a 14.9x 2026E P/E multiple [15] Quanta - Anticipated 2Q25 revenues to grow 57% YoY to NT$488 billion, supported by AI server ramp-up [20] - May revenues were 13% below estimates, with a decline in notebook shipments [20] - Maintain Neutral rating with a target price of NT$273 based on a 12.8x 2026E P/E [23] Wiwynn - Expected 2Q25 revenues to grow 161% YoY to NT$202 billion, driven by strong demand for ASIC AI servers [38] - May revenues were 34% higher than estimates, reflecting continued strong demand [39] - Maintain Buy rating with a target price of NT$3,838 based on a 20.5x 2026E P/E [42] Wistron - Expected June revenues to grow 123% YoY to NT$198 billion, driven by AI server demand [47] - Strong revenue in May, up 162% YoY, supported by new product cycles [44] - Maintain Buy rating with a target price of NT$152 based on a 14.8x 2026E P/E [49] Gigabyte - Expected 2Q25 revenues to grow 32% YoY to NT$97 billion, supported by AI servers and VGAs [50] - May revenues were 79% above estimates, reflecting tariff-related pull-ins [51] - Maintain Buy rating with a target price of NT$344 based on a 14.0x 2026E P/E [55] AVC - Expected 2Q25 revenues to grow 67% YoY to NT$27 billion, driven by liquid cooling business [27] - May revenues were higher than estimates, reflecting the rising trend in liquid cooling [27] - Maintain Buy rating with a target price of NT$878 based on a 20.0x 2026E P/E [37] ASUS - Expected 2Q25 revenues to grow 21% YoY to NT$175 billion, supported by AI and gaming PCs [57] - May revenues were up 41% YoY, exceeding estimates [62] - Maintain Buy rating with a target price of NT$849 based on a 14.6x 2026E P/E [63] Inventec - Expected June revenues to be similar to May, supported by AI server ramp-up [65] - Maintain Neutral rating with a focus on AI server revenue contribution [65]

Core Insights - Super Micro Computer, Inc. (SMCI) has announced the certification of its BigTwin Server for immersion cooling, utilizing 4th and 5th Gen Intel Xeon Scalable Processors, enhancing performance and efficiency in data centers [1][6] Group 1: Certification and Collaboration - The Supermicro BigTwin server has undergone rigorous testing and is now recognized as a certified immersion server, ensuring compatibility with Intel's guidelines and the Open Compute Project (OCP) specifications [1][4] - Supermicro's long-standing collaboration with Intel combines advanced processor technologies with high-performance solutions, ensuring that the BigTwin server remains fully functional when immersed in specified liquids [2][4] Group 2: Efficiency and Environmental Impact - Immersion cooling technology significantly lowers Power Usage Effectiveness (PUE), with data centers using Supermicro immersion servers achieving PUE values close to 1.05 or lower, thus reducing energy costs and environmental impact [3][8] - The immersion cooling method allows for denser compute configurations without increasing thermal load, improving overall energy efficiency and reducing the need for traditional air-based cooling systems [3][5] Group 3: Industry Standards and Future Outlook - Supermicro's involvement in the OCP Community has been crucial in advancing immersion cooling standards, promoting compatibility, efficiency, and scalability across data center deployments [4][5] - The growing demand for immersion-certified servers is driven by the need for efficient cooling solutions in data centers, particularly for AI and HPC applications, which require powerful processors [8]