Why Super Micro's stock is rocketing toward its best day in seven months

By Emily Bary

Super Micro announced a liquid-cooling offering and said it's shipping more than 100,000 graphics processing units each quarter

Super Micro Computer Inc. shares have seen a rocky recent stretch, but that momentum is flipping on Monday.

Shares of the server maker are up 16.4% in morning action and coursing toward their best daily performance since they rose 18.7% on March 4. The stock is also the day's leading gainer in the S&P 500 SPX by a wide margin.

Super Micro (SMCI) said Monday that it was unveiling a complete solution for liquid cooling that incorporates "coolant distribution units," or CDUs, as well as cooling towers and other forms of technology.

Given the heavy power requirements of artificial-intelligence workloads, server makers have been promoting liquid-cooling solutions that help keep hardware from overheating so that it can run more effectively.

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Super Micro said in a Monday release that its offering "reduces ongoing power costs and Day 0 hardware-acquisition and data-center cooling infrastructure costs."

The company also presented data points indicating that direct-liquid-cooling technology has benefits relative to air cooling. Super Micro sees "up to 40% energy savings for infrastructure" as well as 80% space savings.

Plus, Super Micro said it's shipping more than 100,000 graphics-processing units each quarter.

Super Micro's Monday stock momentum stands in contrast to more muted moves in other server names. Dell Technologies Inc. shares (DELL) are down fractionally on the day while Hewlett Packard Enterprise Co. shares (HPE) are up fractionally. Shares of Nvidia Corp. (NVDA), a Super Micro partner, are ahead nearly 3%.

Read: Yet another bullish call on Nvidia's stock? Don't ignore this one.

The rally in Super Micro's stock Monday comes after a big comedown in recent months. As of Friday's close, shares were down 65% from their all-time closing high established in March. The company has seen margins decline in the face of stronger competition and a more aggressive approach to pricing. Additionally, a short seller raised concerns about Super Micro's accounting in an August report, and the company later said it would delay its annual filing while reviewing its financial controls.

At the time, Super Micro didn't anticipate that the review would lead to material changes to reported numbers.

-Emily Bary

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10-07-24 1154ET

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