Nvidia’s Shift Away from Supermicro May Boost This AI Powerhouse
The recent turmoil surrounding Super Micro Computer (NASDAQ: SMCI) has left many wondering about the fate of its partnership with Nvidia. With Supermicro facing scrutiny from regulators and investors, Nvidia is reportedly rerouting orders for its upcoming Blackwell GPU to avoid potential supply chain disruptions. This development could be a blessing in disguise for Dell Technologies (NYSE: DELL), a company that stands to benefit from the fallout.
A New Opportunity Emerges
Dell’s infrastructure solutions business, which provides networking services and products for data centers, makes it an attractive alternative for Nvidia. As a key player in the artificial intelligence (AI) industry, Dell’s storage solutions and server designs are well-positioned to support the development of generative AI applications. The company’s existing relationship with Nvidia, as hinted at during its last earnings call, could provide a significant tailwind for Dell.
A Clear Indication of Close Ties
During the call, Chief Operating Officer Jeffrey Clarke revealed that Dell has been selling its advanced architecture aligned to Blackwell to several customers. Moreover, he noted that the company’s IT infrastructure backlog is heavily focused on Nvidia’s H100s, H200s, and Blackwell, as well as opportunities with AMD and Intel. This suggests that Dell is already working closely with Nvidia, and the Blackwell launch could be a significant catalyst for the company’s growth.
A Valuation Disconnect
Despite the controversy surrounding Supermicro, Dell’s forward price-to-earning (P/E) ratio has remained steady at 17.1. In contrast, the S&P 500’s average forward P/E of 22.1 is significantly higher. This valuation disconnect presents an attractive opportunity for investors to capitalize on Dell’s potential upside.
The Future Looks Bright
As Nvidia seeks to mitigate supply chain risks, Dell is well-positioned to benefit from the shift away from Supermicro. With its existing relationship with Nvidia and its strong infrastructure solutions business, Dell could emerge as a winner in the AI industry. As the Blackwell launch approaches, investors would be wise to consider the potential upside of Dell Technologies.
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