Investors have not found one of our Top 5 Fave Model Portfolio holdings that should benefit from the AI “hype” that is not actually hype. We have followed it for 7 years, but today, the company is led by a new CEO that used to work for its biggest customer.
This little known data center company generates around $20 million in revenue, is profitable and has a major customer at the front lines of building out AI data center infrastructure with its partner, AI chip maker NVIDIA Corporation (NVDA).
Yet, the stock has been trading near its lows. That being said, shares are starting to trickle higher.
We think NVDA’s earnings release published yesterday after the market closed on February 21, 2024., which mentions data centers, is a potential reason.
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By now, you probably know that NVDA shares were up 15% on the strong Q4 report.
Comments from the company’s CEO show how important of a growth factor AI is going to be for them going forward:
“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Jensen Huang, founder and CEO of NVIDIA.
“Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies. Vertical industries — led by auto, financial services and healthcare — are now at a multibillion-dollar level.
NVDA is up 57% this year and 617% since its bottom in 2022.
Speaking of data centers, Super Micro Computer, Inc. (SMCI) shares are up 247% since the beginning of the year and 2,050% since the beginning of 2022. The company generates around $24 billion in annual revenue. SMCI is a Total IT Solutions provider with server (Data Centers), AI, storage, IoT and switch systems, software and services while continuing to deliver advanced high-volume motherboard, power and chassis products.
There’s more…
Cyber security stock CSP Inc. (CSPI), one of our Buy On Pullback Model Portfolio candidates that we unfortunately never added to the portfolio, is up 26% today, possibly due to investors finding out that CSPI has “partnered” with NVDA, per an exchange made between an investor and CSPI’s CEO on its Q1 2024 earnings conference call on
Investor
“And we know that there is a press release showing that NVIDIA is a current partner. Now I know companies like NVIDIA are very secretive and you might not be able to tell me anything about it, but it is public info that they are a partner. Are they partnering on the AZT side? And are you still in talks with other big cybersecurity players to potentially sell this for you since it doesn’t compete and it could just be an add-on product like Palo Alto’s offering?”
Victor Dellovo, CSPI CEO
“Yes and yes. We are still talking to NVIDIA heavily, weekly, and we are still talking to other major players out there to partner with them to make our offering as a — selling as a bundled product.”
CSPI is up nearly 200% since we added to the BOP bench on September 29, 2023.
Why is this all interesting? Because the data center company we are talking about tucked away verbiage, in its third-quarter earnings conference call, that mentions AI’s role in data centers and that its customers are asking how they can get computer solutions (AI) as quickly as possible.
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