When you think of artificial intelligence (AI) winners, Nvidia (NASDAQ: NVDA) may be the first to come to mind. The company holds 80% of the AI chip market, with its graphics processing units (GPUs) powering some of the most important workloads out there. Nvidia's earnings have climbed in the triple digits in recent quarters thanks to this dominance, and its stock's performance has followed.
But my prediction is that another company will benefit even more than Nvidia from the AI boom over the long run. This particular company not only wins when it launches a new product, but it also scores a victory when Nvidia and any of the world's top chip designers release something new.
In addition, this company has reported soaring earnings in recent years -- and this year, its stock has even been outperforming Nvidia's. It's advanced more than 180%, while Nvidia's climbed 140%. Let's take a closer look at this current and future AI winner.
Image source: Getty Images.
A 30-year-old business
The company I'm talking about is Super Micro Computer (NASDAQ: SMCI) , a maker of servers, workstations, and full rack scale solutions that you'll find throughout AI data centers. Supermicro has been around for more than 30 years, but its business truly took off in recent times, thanks to the AI boom.
For example, Supermicro's liquid-cooling technology garnered only about 1% market share over most of the company's history. Now, the company expects as much as 30% of all data center operations to use liquid cooling within the coming two years. AI's intense computational power generates significant heat, and this is set to continue as capabilities increase -- but liquid cooling solves the problem.
The popularity of Supermicro's products and liquid-cooling features have helped revenue to soar. The company recently posted its first $3 billion quarter -- a level of revenue that it reported for a full year as recently as 2021. Demand for its full rack scale solutions continues at record levels, the company has said in its latest earnings report.
Analysts are expecting the AI market to grow from about $200 billion today to more than $1 trillion by end of the decade, so demand for Supermicro's products is likely to continue climbing.
Increasing revenue opportunities
But why could this company benefit even more from the AI boom than Nvidia? Nvidia's revenue opportunities increase every time it releases a new product -- and that's the same for most companies. Supermicro, however, sees its revenue opportunities increase each time the biggest chip companies, such as Nvidia or Advanced Micro Devices , release a new chip.
This happens because Supermicro integrates these chips into its products, creating something new for its customers. To ensure this new wave of revenue happens sooner rather than later, Super Micro works closely with the chipmakers to monitor their release schedules. This way, it's ready to customize products for its customers as quickly as possible.
This strategy has worked. Supermicro has a growth rate that's five times faster than its industry over the past 12 months.
Looking ahead, the company should benefit as Nvidia releases its new Blackwell architecture and chip, set for later this year. But as mentioned, Supermicro's sales also will climb as other chipmakers launch products, so its fortunes aren't tied to just one chip company. Meanwhile, Nvidia's successes are tied to its ability to remain well ahead of rivals.
That's why I predict that Supermicro, boosted by growth across a range of major AI players, will benefit more from the AI boom than chip giant Nvidia.
What does this mean for investors? If you're looking for a solid long-term AI stock, Supermicro could be a safer bet than Nvidia -- and it's demonstrated its ability to offer returns that are particularly strong.
On top of that, Supermicro, trading for only 24x forward earnings estimates , compared to 43x for Nvidia, looks dirt cheap, considering its growth so far and what may lie ahead. So now is a great time to get in on this player, which could become one of the biggest winners of the AI growth story.
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy .
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