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Super Micro Computer shares surge as AI server demand powers big forecast raise

COMPUTEX Taipei technology trade show in Taipei

By Akash Sriram

(Reuters) - Shares of Super Micro Computer jumped about 25% to a record high on Friday after the company projected quarterly results well above its current estimates due to strong demand for artificial intelligence servers.

The company is also riding a rising need for its liquid cooling solutions from data centers processing more generative AI applications.

"We speculate that the company's upside is importantly driven by earlier-than-expected hyperscale engagements, that are keen on deploying quickly liquid cooled racks that uniquely falls into Supermicro's area of expertise," Rosenblatt Securities analyst Hans Mosesmann wrote in a note.

The upbeat estimates from Supermicro, which counts NASA and Japan's NEC as customers, follow chipmaker Taiwan Semiconductor Manufacturing Co's bullish note on AI on Thursday that fueled a global rally in chip stocks.

At $387.90, the company is set to add more than $4 billion to its market capitalization of $17.3 billion, as of last close.

San Jose, California-based Super Micro now expects net sales between $3.6 billion and $3.65 billion in the quarter ended Dec. 31, compared with its prior forecast of $2.7 billion to $2.9 billion.

The data center infrastructure company boosted its adjusted profit expectation to between $5.40 and $5.50 per share from $4.40 and $4.88 for its second quarter.

The 71% sequential growth for Supermicro handily outpaces the GenAI market growth that is estimated to have been about 41% for the December quarter from the prior three-month period, Northland Securities analyst Nehal Chokshi said.

Supermicro's stock has more than tripled since May last year when CEO Charles Liang said the generative "AI momentum has benefited Super Micro greatly."

It has has a forward price-to-earnings multiple - a common benchmark to value stock - of 16.22, compared with 7.58 for Hewlett Packard Enterprise and 16.72 for International Business Machines.

(Reporting by Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila)