The Zhitong Finance App learned that Ultra Micro Computer (SMCI.US) will announce its third quarter results after closing on April 30 (Tuesday). According to general market forecasts, ultra-microcomputer's revenue for the third fiscal quarter is expected to be US$3,927 million, a sharp increase of 206.04% year on year; earnings per share are 5.46 US dollars, up 256.86% year on year.

According to information, the main products of ultra-microcomputers include servers, storage systems, full-rack scale solutions, etc., which can be used to deploy AI chips, that is, Nvidia (NVDA.US), American Ultra Micro (AMD.US), and Intel (INTC.US) will all use their products.

Competitors in the industry include Dell Technologies (DELL.US), HP (HPQ.US), etc. But what makes the ultra-micro computer stand out is that it focuses on high-intensity, high-density computing power solutions, and this characteristic makes it more suitable for deploying AI compared to other competitors. As a result, in this wave of AI, the stock price performance of ultra-microcomputers has far surpassed rivals.

As a leading artificial intelligence server manufacturer, Ultramicrocomputer expects third-quarter revenue to meet the upper guidance limit it previously provided, while making a conservative month-on-month growth forecast for the fourth quarter. Investors will be watching the company's market share and performance in integrating Nvidia (NVDA.US)'s latest products.

Over the past 12 months, ultra-microcomputer shares have surged 804%, significantly exceeding Nvidia's 226% increase, thanks to the company's leading position as a server manufacturer in the AI boom.

In January of this year, Ultramicrocomputer raised sales and profit guidelines before announcing financial results for the second fiscal quarter, but this time it broke the previous practice of providing initial results. This raised investors' concerns and led to a sharp drop of 23% in a single day.

It is worth noting that the company's profit margin may be further compressed by fierce market competition, and the low end manufacturing label also makes investors prefer short-term holdings, and the possibility that stock prices will fluctuate greatly in a short period of time is quite likely.

Analysts' Views

Analysts at Wedbush pointed out, “The forecast for ultra-microcomputers already includes quarterly growth expectations of more than 20%. The guidance of the company's management over the past 18 months has been both aggressive and conservative.” Analysts at the bank believe that ultra-microcomputers can either improve existing guidance or stick to the status quo.

J.P. Morgan said that as GPU supply is no longer limited, investors will also pay close attention to revenue growth from the third quarter to the fourth quarter, whether the company can increase revenue to $20 billion or more by fiscal year 2025, and leverage and expansion in operating profit margins. The bank's analysts gave the ultra-micro computer an “plus weight” rating, and the target price was $1,150.

“While we expect the company to highlight its strong revenue growth, including over 200% year-on-year growth in the third quarter and more than 100% year-on-year growth in the fourth quarter, we think investors' focus will be on whether ultra-micro computers can maintain their share in the AI server market for next-generation Nvidia GPU products,” wrote Samik Chatterjee, an analyst at J.P. Morgan Chatterjee, in an investor report. “In particular, branded server companies such as Dell (Dell.US) and HPE.US (original design manufacturer) companies, Including in the context of increasing competition among ODM companies now participating in the Nvidia product reference design architecture section.”

Loop Capital analyst Ananda Baruah is optimistic about the leading position of ultra-microcomputers in the AI server market and has raised the target price sharply from $600 to $1,500. He pointed out, “Since ultra-microcomputers have been included in the S&P 500 index, it is expected that they will maintain a price-earnings ratio of 20-30 times in the future. According to the target price set by Baruah, he predicts ultra-microcomputer earnings of 50-60 US dollars per share in the 2026 fiscal year, and revenue will be between 30 and 40 billion US dollars.”

Wells Fargo analyst Aaron Rakers reiterated that the ultra-micro computer “holds” the rating and maintains the target price of $960. The analyst believes, “On the eve of earnings reports, ultra-microcomputers did not give positive advance statements in accordance with convention. This is considered negative. In particular, this is currently at a time when the field of artificial intelligence is important, which heightens market concerns.”

Not everyone has always been optimistic about the development trend of AI. Analyst agency CCS Insight pointed out a few days ago that generative AI may cool down in 2024 due to reasons such as rising costs of operating AI and increased calls for increased AI supervision. Gary Marcus, founder of the startup Robust.ai, also mentioned that currently humans are still far from the goal of general artificial intelligence (AGI).