Super Micro Computer Stock Surges 15.71% on 200 Billion Dollar DataVolt Deal

Super Micro Computer, Inc. (SMCI.US) has secured a significant contract with DataVolt, valued at 200 billion dollars, for a multi-year agreement. The contract focuses on GPU platforms and rack systems, which will be deployed in DataVolt's data centers located in Saudi Arabia and the United States. This deal is part of DataVolt's investment in a new data center park in Neom, which is expected to be operational by 2028 with a capacity of 300MW and a development cost exceeding 5 billion dollars. Despite the specifics of the agreement, such as whether it is a single-source or multi-source contract, profit margins, exact timelines, and whether it is a Memorandum of Understanding (MoU) or a binding contract, remaining undisclosed, the agreement is seen as a positive development for
.Super Micro Computer's stock price rose 15.71% on Wednesday, closing at 45 dollars per share, reflecting the market's positive response to the news. Goldman Sachs, however, maintained its "sell" rating on the company, setting a target price of 24 dollars per share. The firm acknowledged the potential impact of the deal, suggesting it could signify an expansion in AI infrastructure beyond current major players, potentially including a broader range of customers. If the deal spans five years with a 5% profit margin and all 200 billion dollars are attributed to IT hardware revenue, it could imply an annual revenue of 40 billion dollars and an EBIT of 2 billion dollars for Super Micro Computer. Nevertheless, Goldman Sachs chose to maintain its "sell" rating, indicating a cautious stance on the company's future prospects.
Super Micro Computer's partnership with DataVolt is expected to enhance the company's visibility and potentially lead to an upward revision of its guidance. This collaboration underscores Super Micro Computer's strategic direction and is anticipated to positively impact its operations and financial performance in the coming years. Additionally, the company has begun shipping servers equipped with AMD's latest EPYC 4005 series processors, designed to increase data center computing density and reduce overall ownership costs. This move is part of Super Micro Computer's ongoing innovation efforts to provide powerful and cost-effective solutions for cloud service providers and enterprises.
Other investment firms, however, have a more optimistic view of the deal's potential to boost Super Micro Computer. Raymond James maintained its "outperform" rating and a target price of 41 dollars per share, citing the company's leadership in AI infrastructure and strategic initiatives such as expanding U.S. manufacturing and adopting NVIDIA's Blackwell platform. Meanwhile, Needham reinstated its "buy" rating and a target price of 39 dollars per share, highlighting Super Micro Computer's position in the AI and high-performance computing markets. Despite recent performance challenges, Needham expressed confidence in the company's future, citing improved management and resolved regulatory risks.
Rosenblatt Securities adjusted its target price for Super Micro Computer from 55 dollars to 50 dollars, while maintaining its "buy" rating. This adjustment reflects a cautious approach due to anticipated delays in the shipment of NVIDIA's upcoming Blackwell GPU platform. Despite these challenges, Rosenblatt remains optimistic about Super Micro Computer's growth prospects, driven by strong demand for new systems and expectations for future quarterly revenue.

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