How AI demand will drive enterprise tech stocks and support growth in the AI ​​ecosystem

Important points

  • The supermicrocomputer’s stock soared to record highs this week, highlighting the potential gains for companies within the growing artificial intelligence (AI) ecosystem that could benefit from AI demand.
  • Super microcomputers may not have made headlines like Nvidia, a major backer of the AI ​​wave, but the compute, storage, and networking solutions provider is playing an important role for customers .
  • JPMorgan analysts said networking and hardware companies could be the “forgotten” winners of the AI ​​boom.
  • Analysts cited cloud networking company Arista, server providers Dell and HP Enterprise, and optical equipment maker Coherent as companies that stand to benefit greatly from the growing demand for AI, especially those whose customers include chip makers.

Super Micro Computer (SMCI) stock soared earlier this week, the first since early 2024, as analysts said the company could benefit significantly from demand for artificial intelligence (AI) technology. The value has nearly tripled.

This progress extends beyond big players like NVIDIA (NVDA) and Advanced Micro Devices (AMD) to other companies within the growing AI ecosystem that have soared in value over the past year amid AI optimism. It may also highlight potential profits for companies in

What is a super microcomputer? Why did stock prices soar?

Super Micro Computer may not be as well-known as Nvidia, but its computing, storage, and networking solutions are needed by the semiconductor companies it serves to meet the growing demand for AI. There is a possibility.

Notable customers using Super Micro Computer’s AI infrastructure include Nvidia, Advanced Micro Devices, and Intel (INTC).

Bank of America analysts said the company is “expectant.”[s] SMCI said it “expects strong revenue growth in the coming years driven by AI-related demand,” as the stock reached record highs earlier this week, but Wells Fargo analysts said the company’s AI-related profits Shares fell on Friday after the company suggested it may already be priced in.

Other tech hardware and networking stocks could also ride the wave of the AI-driven rally

Recent breakthroughs in supermicrocomputers may indicate that other companies that provide products and services to AI chip makers like Nvidia could also benefit from growing demand for AI. be.

JPMorgan analysts said that while “investors have largely settled on who will most directly benefit from AI investments,” there are some “forgotten” AI winners. The company highlighted Arista Networks (ANET), Dell Technologies (DELL), Hewlett Packard Enterprise (HPE), and Coherent (COHR), along with Super Micro Computer, in its “Forgotten AI Warriors in Hardware” report.

Arista, a cloud networking company that provides solutions for GPUs and storage networks that power AI workloads, did not name specific customers in its latest earnings call, but said it has multiple trials underway with major AI players. It was revealed that.

“Arista remains in a solid position to deliver upside to earnings estimates through increased AI revenue,” JPMorgan analysts said after the company’s latest earnings report.

Analysts said Dell Technologies and HP Enterprise could also benefit as server providers.

“Branded server companies such as HPE and DELL are increasing their engagement with Nvidia, which will benefit both companies in terms of content per server and computing business returns,” they wrote.

In late 2023, Nvidia announced that Dell and HP Enterprise will integrate NVIDIA Spectrum-X Ethernet networking technology for AI into their servers to help enterprise customers accelerate AI-generated workloads.

Optical hardware maker Coherent says the market opportunity for a portfolio of transceivers that meet requirements set by AI and ML is expected to similarly grow amid the AI ​​boom. The transceiver hardware can “support Ethernet and InfiniBand, as well as proprietary protocols for AI and ML, such as NVIDIA’s NVLink.”

Analysts at William Blair & Co. said, “AI focus continues on Coherent and its opportunity to supply the industry with its 800G transceiver technology,” adding, “Due to strong demand growth, Coherent is slowing development and ramp-up.” It’s taking time,” he added. AI-related revenues are expected to increase.

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