Your questions answered Vol 2 - IM Private Clients
Discussion
dingg said:
Smci and amzn tomorrow Adam, going to be sparks flying one way or another
Amazon should report very good AWS numbers. They have been investing a lot in their accelerated compute platform and no doubt it is being monetised to the max and as such they will probably comment on further capex in this space. I would expect overall a solid quarter with no big surprises.SMCI, well, impossible to say what they will report. I mean that literally(no miss though). They normally have something to say via update 2 weeks prior and they didn't make any announcements. Why. Don't know, could be a policy change or quiet period after their secondary offering. We know they didn't miss as that must be reported early. Expectations are for 3.93B and $5.68 EPS.
We would like to see margins holding (which should benefit shortly from Malaysia build out) and a strong guide. A hotly anticipated earnings call for sure. All conditions are set for a big beat however their silence recently has muddied the water.
Regards
thepeoplespal said:
I started an ISA in 23/24 tax year that direct debits out of my account and into IM.
Do I have to do anything for this year's ISA using the same allocations? Or will the DD just come out as usual (what I'd like).
Hi TPP,Do I have to do anything for this year's ISA using the same allocations? Or will the DD just come out as usual (what I'd like).
Best you email steve.copper@intelligentmoney.com to check whether your DD is a one off or ongoing and whether you have ticketed the box to replicate historical investment instructions. Without knowing your details I can't check
Regards
Adam
A lot of detail to unpick re SMCI but a few highlights. Falling 10% after hours but at one point was up 10%. It's something we have seen before and volatility will continue. I can't say but id I expect a lot of this to reverse, possibly today.
What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
Edited by AdamIM on Wednesday 1st May 10:16
AdamIM said:
A lot of detail to unpick re SMCI but a few highlights. Falling 10% after hours but at one point was up 10%. It's something we have seen before and volatility will continue. I can't say but id I expect a lot of this to reverse, possibly today.
What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
Will pht be having a greater weighting towards smci going forwards?? What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
Edited by AdamIM on Wednesday 1st May 10:16
Suspect there is a lot of cash sitting in the pht pot currently during the rebalance and results season (opportunities)?
dingg said:
AdamIM said:
A lot of detail to unpick re SMCI but a few highlights. Falling 10% after hours but at one point was up 10%. It's something we have seen before and volatility will continue. I can't say but id I expect a lot of this to reverse, possibly today.
What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
Will pht be having a greater weighting towards smci going forwards?? What is important is how the business is executing. Their guide was 3.7-4.1B and they reported $3.85B but also stated that more than $1B in critical components were delivered 1 week after quarter end (late). We did discuss this recently. Does it matter? No. The guide for Q4 is much higher than anticipated at 5.1-5.5B. Revenue growth is accelerating from 100% to the 130% range and management said they have a record backlog and growing, with the ability to generate 'much much more' if they get additional components. Gross Margins actually improved 10 bps.
EPS was $6.56, materially ahead of the guide and 328% higher than Q3, 2023. The Q4 guide is for > $8 EPS.
What few understand about their business is they do have an enduring competitive advantage. Specifically in their design wins. They are the Gold Standard for Custom Design HPC racks, in particular their DLC designs. This is a fact-Dell/HPE are a long way behind. Management stated that by June they will have 6,000 DLC rack capacity per quarter. They only shipped 1,000 DLC racks in the entire Q3 period. Blackwell architecture is a DLC must have due to the energy consumption and cooling needs. Blackwell is dropping around the September time period.
Second, DLC racks are much denser in terms of GPU's. Up to 72 vs 32 for Hopper solutions. It is clear that a DLC rack will cost 2-3X more than a Hopper solution, plus the HBM3e memory, power supply and cooling. So a switch to DLC rack supply will have a material impact of revenue, if 130% growth currently isn't enough we expect this to gain another gear
Third, the company is growing its market share through margin management however the market is wrong to focus purely on said margin because the nature of this business is design wins which span 5-10 years. A large customer does not sign an agreement for a one-off procurement. They sign up vendors for many many years, i.e there is scope to grow margin when the supply contract evolves, efficiencies are made(throughput) and cross selling. We know this because the racks themselves have built in redundancy to allow key components to be swapped out when new architectures are released. The point being it locks in the customer long term and this is why SMCI will use margin today to lock in these lucrative long term plays.
The company is focussed on growth across all regions in terms of further capacity. Citing even more North American factories 'in progress'
It is very difficult the model/predict exactly what the revenue/EPS numbers will be quarter to quarter, for obvious reasons however if you take a step back and look at the wider market you can clearly see a path to many many multiples of todays revenue. 2023 7.2B, 2024(June) circa 15.2B, 2025, 30B? More?
The fwd PE on SMCI sits at approx 15 with growth in excess of 100% and visibly sustainable for some time.
Edited by AdamIM on Wednesday 1st May 10:16
Suspect there is a lot of cash sitting in the pht pot currently during the rebalance and results season (opportunities)?
Portfolio changes. PHT and other portfolio's that currently hold Global Payments which see a change. Selling GPN and Buying a new name. To be announced when the rebalance is complete. Global Payments overall generated 9.88% gains within PHT. A good business but I suspect carrying too much debt which is a drag on earnings, coupled with the highly competitive nature of transaction acquirers-very thin margins.
Regards
Adam
Regards
Adam
uk66fastback said:
Yes, I think there’s been a bit of a switch …
I thought it was just wishful thinking...It was down about $80 in premarket trading (after being down $30+ during normal trading yesterday) and it opened at that level and carried on going down.
Bit miffed as I hummed and harred about selling yesterday when the markets opened and it nudged $900 but stupidly thought the results would be good enough for it to at least hold steady.
AdamIM said:
thepeoplespal said:
I started an ISA in 23/24 tax year that direct debits out of my account and into IM.
Do I have to do anything for this year's ISA using the same allocations? Or will the DD just come out as usual (what I'd like).
Hi TPP,Do I have to do anything for this year's ISA using the same allocations? Or will the DD just come out as usual (what I'd like).
Best you email steve.copper@intelligentmoney.com to check whether your DD is a one off or ongoing and whether you have ticketed the box to replicate historical investment instructions. Without knowing your details I can't check
Regards
Adam
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