SMCI: The Manufacturing Titan and Hidden Worries of the AI Era
In the wave of artificial intelligence (AI), SMCI has become a dark horse in the market with its eye-catching stock performance. Despite being a mid-to-low-end manufacturing company（low gross proft margin), its stock price has increased astonishingly over the past year, far exceeding that of the tech giant Nvidia.
This article will delve into how Supermicro has achieved success in the AI field and analyze the reasons behind it as well as potential risks.
Strong Bond with Nvidia:
The close cooperation with Nvidia is key to Supermicro's success. When Nvidia launched AI chips, Supermicro quickly provided corresponding server hardware support, a strategic move that gave it a head start in the AI chip server market.
Increase in Capacity Utilization Rate:
As tech giants begin to develop their own AI chips, Supermicro's capacity utilization rate is expected to increase significantly. Currently, due to the supply shortage of Nvidia chips, Supermicro's capacity utilization rate is only 65%. With the increase in AI chip supply, the potential for growth in Supermicro's performance is enormous.
Advantage in Service Capability:
Supermicro's customized service capability in AI scenarios is another major advantage. The company adopts a Building Blocks architecture, which can flexibly provide customized server solutions according to customer needs, which is particularly important in the AI field.
Discussion of Potential Risks
Although Supermicro's stock performance is impressive, the risks it faces are also undeniable. First, the company's high turnover rate（10%） may reflect investors' concerns about its long-term development. Second, as a mid-to-low-end manufacturing company, Supermicro has limitations in product technology and operational stability.
In addition, the company's customer concentration is high, with a single company, Meta, accounting for 21% of Supermicro's revenue, which undoubtedly increases the uncertainty of the company's performance.
Conclusion:
Supermicro's success in the AI field is remarkable, but the risks it faces are also undeniable. Investors should fully consider these factors when considering investing in Supermicro to make wise decisions. The story of Supermicro reminds us that in today's rapidly developing AI technology, even mid-to-low-end manufacturing companies can become unexpected winners in the market.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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MomentumPython1337 : don't forget vertive holdings as well $Vertiv Holdings (VRT.US)$
2ndChance : SMCI is expanding its business due to other big companies do not see us as a rival. So it has advantage of economy of scale and profits will rise faster than big companies in the AI industry.