Breakups are never fun. And in the case of Super Micro Computer (NASDAQ: SMCI), there’s a pretty clear reason why its longtime partner Nvidia appears to be moving on.
In late August, Supermicro came into the spotlight as the target of a short report written by Hindenburg Research. Shortly after, Supermicro delayed its 10-K filing before The Wall Street Journal reported the Department of Justice had launched a probe into the company. To matters worse, Ernst & Young resigned as Supermicro’s financial auditor due to concerns over the company’s reporting. In the midst of these falling dominos, the company was expected to be a major supplier of new storage clusters and server rack designs featuring Nvidia’s soon-to-launch Blackwell GPU.
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Apparently, Nvidia has had enough. According to an article out of Digitimes, Nvidia is routing Blackwell orders away from Supermicro to avoid potential supply chain disruptions.
In this context, Dell Technologies (NYSE: DELL) could emerge as a winner from the Supermicro fallout. Here’s why the stock represents a great opportunity.
Nvidia has a lot on the line with the Blackwell launch, and any bump in the road at this stage of the game is unacceptable. But why might Dell be able to help in this situation?
Dell is known for consumer and enterprise computing devices, but it also has a big infrastructure solutions business, which is a fancy way of saying Dell provides networking services and products for data centers. Like Supermicro, Dell’s storage solutions and server designs are an integral component of the broader artificial intelligence (AI) industry. The reason for this is that data centers house chipsets such as Nvidia’s GPUs, which are an important piece of equipment for developing generative AI applications.
Perhaps the biggest reason Dell could be a winner from the Blackwell launch is due to some clues that management dropped during the company’s last earnings call. In August, Chief Operating Officer Jeffrey Clarke shared that the company has been selling its “most advanced architecture aligned to Blackwell to a number of customers.”
He followed this up by telling investors that Dell’s IT infrastructure backlog “is in all sorts of architectures,” but “[t]he vast majority [is] within Nvidia H100s, H200s, and Blackwell, as well as a couple of other opportunities around AMD and Intel.”
