Q3 2024 Summary
Published Jan 4, 2025, 1:15 AM UTCInitial Price$28.00December 31, 2023
Final Price$101.00March 31, 2024
Price Change$73.00
% Change+260.71%
- Ambitious Growth Plans: SMCI aims to grow 3x to 5x faster than the industry's average, driven by strong demand in AI and their ambitious plans to become the number one vendor. , , ,
- Leadership in Liquid Cooling Technology: The company is preparing to deliver over 1,000 liquid-cooled racks in Q4, with in-house designed components that can help customers save up to 40% in energy costs, positioning SMCI strongly in the AI server market. , , ,
- Strong Backlog and New Product Pipeline: SMCI has a record high backlog and expects strong sequential growth, fueled by new products supporting the latest NVIDIA and AMD GPUs, with leadership confident that this strong growth will continue for many quarters, if not many years. , ,
- Customer concentration risk: One existing customer represented 21% of Q3 revenues, and another represented 17%, indicating heavy reliance on a few large customers. ,
- Cash flow challenges and need for additional capital: The company experienced significant cash burn due to increased inventory and accounts receivable, using $1.5 billion in cash from operations in Q3. Management indicated the need for more capital to support ambitious growth plans. , , ,
- Pressure on gross margins due to competition and pricing: The company expects gross margins to decline sequentially, partially due to aggressive pricing to win market share and increased competition in the AI server market. The target gross margin range remains 14% to 17%, but margins may be under pressure. , ,