Nvidia and Intel have both announced big news in recent weeks -- news that could result in rising revenue from artificial intelligence (AI) customers. Nvidia, the world's biggest AI chip company, plans to launch its Blackwell architecture along with its highest-performance chip ever later this year. And Intel will bring its new Gaudi 3 AI accelerator -- one that it says can outperform Nvidia's current chip H100 -- to the market in the coming months.
Nvidia's new products and services could ensure its leadership position, helping it hold onto its 80% AI chip market share. And Intel's Gaudi 3 may help it gain ground after falling behind earlier in the AI race. But the biggest winner of these major AI chip launches actually may be another company. This player benefits from demand for its own products as well as demand for the most popular chips, and that's helped earnings and share price to skyrocket in recent times.
Let's take a closer look at this AI stock that could continue to roar higher.
Image source: Getty Images.
AI servers and workstations
It's important to remember that, often, customers look to buy AI chips as part of a bigger system, such as a server or workstation. And for this, many turn to Super Micro Computer (SMCI +4.72%), a leader in the field. Supermicro has been around for 30 years but saw its business take off only over the past few years, thanks to demand from AI customers for its products.
The company recently reported its first $3 billion quarter -- that's more than an entire year of revenue -- back in 2021. Supermicro said it's seeing ongoing record demand for AI systems at rack scale, including the latest chips from Nvidia, Intel, and Advanced Micro Devices. Due to this momentum, Supermicro's full-year revenue forecast of at least $14.3 billion implies more than 100% growth year over year. Chief executive officer Charles Liang says we may be facing "an AI revolution" and says that high demand could continue for years.
Specifically, Supermicro is benefiting from new product launches from Nvidia, Intel, and others. The equipment maker works hand-in-hand with these companies, following their innovations and launch schedules so it can quickly make those latest features available within its systems. At the same time, Supermicro's building blocks method, which uses common elements throughout its platforms, also supports the idea of speed.
All of this means that when Nvidia or a rival launches a new chip, Supermicro can offer its platforms with that chip pretty quickly.
NASDAQ: SMCI
Key Data Points
Top chip launches
I said earlier that Supermicro may benefit even more from the upcoming launches than Nvidia and Intel. That's because these companies only generate growth through the sales of their own new products -- but Supermicro may see more demand and revenue growth through all of the top chip companies' product launches. Considering that each chip designer is working hard to keep its market position or grow, and that means frequently releasing new chips, growth in demand for Supermicro's systems that include these innovations may be far from over.
So, should you really forget Nvidia and Intel? Not necessarily. These chip leaders still represent solid buys today. But the advantage of Supermicro is it doesn't rely on the future of one chip company alone. The company's earnings will benefit regardless of whether Nvidia stays in the lead or Intel gains market share.
As a result, Supermicro allows you to bet on overall demand for AI chips and systems, and this could score a win for your portfolio over time. After all, the AI market is forecast to reach more than $1 trillion by 2030, so this growth story may just be getting started.
Now let's consider valuation. Supermicro trades at a premium to Nvidia and Intel in relation to forward earnings estimates.
SMCI PE Ratio (Forward) data by YCharts
I think Supermicro is worth this premium since it benefits from general chip demand, regardless of which chip company is in the lead -- and this makes it lower-risk than the chip companies. At the same time, Supermicro's special features like systems tailored to a customer's needs and its own liquid-cooling technology should keep orders flowing in as well.
So, yes, Nvidia and Intel are buys. But Supermicro may be an even better buy right now as it's set to win from its own innovations -- and the ones of others.
