Supermicro (SMCI, Financial) recently announced the deployment of over 100,000 GPUs with liquid cooling solutions to major AI factories and cloud service providers. This development led to the stock experiencing its largest intraday surge in seven months. If the average price of these GPUs is comparable to NVIDIA's $30,000 chips, this could translate into multi-billion dollar orders.
The company introduced a comprehensive liquid cooling solution designed to reduce hardware and cooling infrastructure costs in data centers. Since June, over 2,000 liquid-cooled racks have been delivered, with the latest shipments exceeding 100,000 GPUs equipped with this cooling technology.
The announcement highlighted the significant energy savings offered by liquid cooling, with power consumption reduced by up to 40%. This efficiency allows for more AI servers within fixed power limits, enhancing computing power and reducing training times for large language models, which is essential for AI factories and major cloud service providers.
Analyst Woo Jin Ho noted that if 1,500 of the delivered racks were shipped in September at a price of around $3 million each, it would equate to $4.5 billion in sales, supporting the midpoint of Supermicro's fiscal year 2025 revenue guidance.
Despite the positive announcement, investors have been concerned about Supermicro's profit margins and accounting practices, with the stock having dropped over 51% in the past three months. In August, Supermicro delayed filing its annual report with the SEC, citing the need for more time to assess internal controls. This coincided with short-seller Hindenburg Research's allegations of accounting issues and undisclosed related-party transactions.
In late September, media reports indicated that the U.S. Department of Justice was investigating Supermicro based on Hindenburg's claims, further impacting investor confidence. Analyst Ho suggested that while the company's AI server demand remains strong, financial transparency issues could hinder growth prospects.
