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Super Micro Computer Inc. expects to top its original forecasts for the latest quarter by a massive margin — and that’s powering its stock to a historic day.
Shares of Super Micro
SMCI,
a chip company that makes storage and server offerings, easily were headed for a record close with about half an hour left in Friday’s session. The stock recently changed hands at $421.27, which would surpass its current record finish of $353.29, hit in early August.
The stock was also on pace to notch its largest single-day percentage increase on record, up 35.4%. It needs to advance more than 31.2% to achieve the feat.
Super Micro’s trading volume, meanwhile, was approaching record levels. 21.5 million shares had changed hands late in the trading day, while the record is 22.4 million, set Aug. 22, 2018.
The stock’s big daily surge comes after the company announced preliminary results for the December quarter that would see revenue top the midpoint of Super Micro’s initial forecast by at least $800 million, or about 30%.
See also: Why Marvell just dethroned Nvidia as Citi’s top chip-stock pick
The company’s release on the matter was fairly sparse, but Rosenblatt analyst Hans Mosesmann said the upside may have come from “accelerating AI/acceleration adoption, incremental Hopper allocation, emerging recovery in general purpose server platforms, penetration into hyperscale projects and perhaps earlier liquid cooling engagements.”
Super Micro is an Nvidia partner, but Mosesmann said the upside was seemed “not in the realm of incremental ‘allocation’ from Nvidia within
the quarter.” Rather, it could reflect greater allocation from hyperscale customers.
The company offers a liquid-cooling option, which seems of growing interest to customers given how much power is necessary when servers run artificial-intelligence applications. “Liquid cooling in the datacenter is a must-have for next generation AI compute hardware solutions with Supermicro seeing as much as 20% of the market in the cloud as liquid cooled,” Mosesmann wrote.
That translates to a “cool $80B [total addressable market] considering [Advanced Micro Devices Inc.’s]
AMD,
Lisa Su’s $400B target for the industry by 2027,” he said.
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