We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can SMCI's Cooling Platforms Emerge as the Next Revenue Pillar?
Read MoreHide Full Article
Key Takeaways
SMCI's cooling platforms generated over 70% of revenues in Q4 fiscal 2025.
DCBBS cuts installation time to 3-6 months, speeding SMCI's revenue recognition.
SMCI targets $33B fiscal 2026 revenues, up 48% from the prior year estimate.
Super Micro Computer’s (SMCI - Free Report) next-generation air-cooled and liquid-cooled GPU and AI platforms are experiencing massive growth in traction, leading to more than 70% contribution to its top line in the fourth quarter of fiscal 2025. Both the enterprise and cloud service providers are adopting SMCI’s cooling technology.
SMCI’s cooling technologies are also part of its Data Center Building Block Solutions (DCBBS). As the demand for modular DCBBS solutions is on the rise, a new direction for SMCI’s air-cooled and liquid-cooling products has also been unlocked in this space. Moreover, DCBBS has also reduced the installation time to three to six months from 12-18 months, making the revenue recognition period shorter for SMCI.
Super Micro Computer’s newly introduced DLC-2 system is also a hit among customers as it reduces power and water consumption by up to 40%, reducing the total cost of ownership, coupled with performance enhancements for modern data centers that serve AI, hyperscale and high-performance computing customers.
The strong adoption of liquid cooling technology has been a trend in the previous quarters as well. For instance, SMCI was executing high-volume shipments of liquid-cooled 4U NVIDIA B200 HGX systems and GB200 NVL72 racks as reported in the third quarter of fiscal 2025. The company had reached a milestone of producing 2000 DLC racks per month.
The rising adoption of SMCI’s air and direct liquid cooling offerings has prompted it to release a strong revenue guidance of $33 billion for fiscal 2026. The Zacks Consensus Estimate for SMCI’s fiscal 2026 revenues is pegged at $32.54 billion, indicating growth of 48% year over year.
How Competitors Fare Against SMCI
Vertiv (VRT - Free Report) has a robust thermal management portfolio covering coolant distribution units, chillers, rear-door heat exchangers, and immersion cooling systems to optimize performance, power utilization, control, and heat reuse. VRT is expanding its storage and server cooling expertise organically and inorganically. Vertiv is working closely with NVIDIA to offer cooling systems to AI factories and has previously deepened its portfolio with the Cooltera acquisition.
Dell Technologies’ (DELL - Free Report) liquid cooling architectures consist of its Apex and PowerEdge platforms designed for AI server solutions. DELL’s cooling solutions are modular, customizable, and allow the integration of both air and liquid cooling features with 24-hour rack deployment turnaround and end-to-end deployment services. These key differentiators make DELL’s server easy to deploy, hence encouraging smoother adoption.
SMCI’s Price Performance, Valuation and Estimates
Shares of SMCI have gained 31.6% year to date against the Zacks Computer- Storage Devices industry’s growth of 21.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, SMCI trades at a forward price-to-sales ratio of 0.75X, lower than the industry’s average of 1.52X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SMCI’s fiscal 2025 earnings implies a year-over-year growth of 23%, while the estimate for 2026 earnings indicates growth of 29% year over year. The estimates for fiscal 2025 and 2026 have been revised downward in the past 30 days.
Image: Bigstock
Can SMCI's Cooling Platforms Emerge as the Next Revenue Pillar?
Key Takeaways
Super Micro Computer’s (SMCI - Free Report) next-generation air-cooled and liquid-cooled GPU and AI platforms are experiencing massive growth in traction, leading to more than 70% contribution to its top line in the fourth quarter of fiscal 2025. Both the enterprise and cloud service providers are adopting SMCI’s cooling technology.
SMCI’s cooling technologies are also part of its Data Center Building Block Solutions (DCBBS). As the demand for modular DCBBS solutions is on the rise, a new direction for SMCI’s air-cooled and liquid-cooling products has also been unlocked in this space. Moreover, DCBBS has also reduced the installation time to three to six months from 12-18 months, making the revenue recognition period shorter for SMCI.
Super Micro Computer’s newly introduced DLC-2 system is also a hit among customers as it reduces power and water consumption by up to 40%, reducing the total cost of ownership, coupled with performance enhancements for modern data centers that serve AI, hyperscale and high-performance computing customers.
The strong adoption of liquid cooling technology has been a trend in the previous quarters as well. For instance, SMCI was executing high-volume shipments of liquid-cooled 4U NVIDIA B200 HGX systems and GB200 NVL72 racks as reported in the third quarter of fiscal 2025. The company had reached a milestone of producing 2000 DLC racks per month.
The rising adoption of SMCI’s air and direct liquid cooling offerings has prompted it to release a strong revenue guidance of $33 billion for fiscal 2026. The Zacks Consensus Estimate for SMCI’s fiscal 2026 revenues is pegged at $32.54 billion, indicating growth of 48% year over year.
How Competitors Fare Against SMCI
Vertiv (VRT - Free Report) has a robust thermal management portfolio covering coolant distribution units, chillers, rear-door heat exchangers, and immersion cooling systems to optimize performance, power utilization, control, and heat reuse. VRT is expanding its storage and server cooling expertise organically and inorganically. Vertiv is working closely with NVIDIA to offer cooling systems to AI factories and has previously deepened its portfolio with the Cooltera acquisition.
Dell Technologies’ (DELL - Free Report) liquid cooling architectures consist of its Apex and PowerEdge platforms designed for AI server solutions. DELL’s cooling solutions are modular, customizable, and allow the integration of both air and liquid cooling features with 24-hour rack deployment turnaround and end-to-end deployment services. These key differentiators make DELL’s server easy to deploy, hence encouraging smoother adoption.
SMCI’s Price Performance, Valuation and Estimates
Shares of SMCI have gained 31.6% year to date against the Zacks Computer- Storage Devices industry’s growth of 21.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, SMCI trades at a forward price-to-sales ratio of 0.75X, lower than the industry’s average of 1.52X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SMCI’s fiscal 2025 earnings implies a year-over-year growth of 23%, while the estimate for 2026 earnings indicates growth of 29% year over year. The estimates for fiscal 2025 and 2026 have been revised downward in the past 30 days.
SMCI currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.