September 23rd, 2024 | 07:15 CEST
Intel, VCI Global, Super Micro Computer – Artificial intelligence offers huge potential
Artificial intelligence (AI) has long since developed from an abstract vision of the future into a real driving force of the global economy. Its enormous potential for optimizing business processes, opening up new markets, and driving innovation is revolutionizing almost every industry. Nevertheless, AI is still in its infancy. In this article, we take a detailed look at two companies driving AI development to strengthen their market position and outpace the competition. If they fail, a stock may lose value, as was recently seen with Intel.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
INTEL CORP. DL-_001 | US4581401001 , VCI GLOBAL LIMITED | VGG982181031 , SUPER MICRO COMPUT.DL-_01 | US86800U1043
Table of contents:
"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Intel – In Crisis
Intel is in the throes of a severe corporate crisis. The chipmaker has lost a third of its revenue in recent years, and operating profits have fallen from over USD 22 billion to almost zero. This alarming business performance is due to technological developments in the field of artificial intelligence (AI), as Intel has lost touch with Nvidia and other chip developers. Intel plays no role at all in the future-oriented field of AI chips. Intel has to take drastic measures to secure profits. Around 15% of the workforce is expected to be cut, and the entire corporate strategy is being reevaluated.
However, there are also positive business developments. Through the CHIPS and Science Act, Intel received USD 3 billion for the Secure Enclave program. This funding supports the Company's cybersecurity and encryption initiatives. Another important step is the establishment of Intel Foundry as an independent subsidiary with government support. This venture aims to strengthen Intel's production capabilities and independence, although it is currently incurring financial losses. In addition, Intel secured a multi-million dollar contract with Amazon Web Services (AWS) to develop customized chips.
This collaboration underscores Intel's commitment to delivering specialized semiconductor solutions to large technology companies. Intel plans to launch the 18A CPUs next year and is also preparing to present the new generation of CPUs, called Arrow Lake, in the coming months. The chip market is highly cyclical. A decline was to be expected after the Corona revenue peak. Despite financial turbulence, Intel is showing strong ambitions in innovation and collaboration with technology giants, which should pay off in the long term. The stock is currently bottoming out and trading at USD 21.39.
VCI Global - Strategic expansion steps
VCI Global, known for its consulting services and technology solutions, has reported impressive and robust financial results for the first half of 2024. Despite adverse economic conditions, the Company increased its revenues by 44% to USD 13.7 million and net profit by 25% to USD 5.4 million. Business Strategy Consulting and Fintech, in particular, showed exceptional growth. Most recently, the Company secured a contract with Legacy Corporate Advisory Sdn Bhd, a leading Malaysian advisory firm. The contract is worth around USD 18 million and aims to take four promising Malaysian companies public on the Nasdaq exchange.
At the same time, the Company has further strengthened its global market presence with a secondary listing on the Frankfurt Stock Exchange and launched a USD 10 million share buyback program. The acquisition of an AI-based messaging platform and new partnerships, like with Wootzano and Cogia GmbH, have expanded the Company's technological capabilities. These steps underscore management's confidence in the Company's ongoing business performance and in increasing shareholder value in the years to come.
VCI Global plans to continue its growth trajectory and is optimistic about the future. The CEO, Dato' Victor Hoo, has significantly increased his stake in the Company to over 27%, underscoring his confidence in its future potential. The Company has also made significant strides in the field of artificial intelligence and is working to establish a high-performance data center in Malaysia by 2025. These initiatives, combined with strong financial results and strategic partnerships, position VCIG for sustainable success. In light of the news, the current share price of USD 0.139, corresponding to a market capitalization of around USD 12 million, can be considered favorable.
Super Micro Computer – AI server of the future
Super Micro Computer (SMCI) plays a central role in the emerging market for artificial intelligence (AI). The increased demand for powerful AI solutions has significantly increased the demand for the Company's products. A key reason for this is the Company's close partnership with Nvidia, one of the leading providers of graphics cards and AI technologies. By providing innovative liquid-cooled AI servers, SMCI has secured a significant share of over 75% of the market segment. This strong market presence puts the Company in an excellent position for future growth in the AI sector.
However, SMCI's stock is currently experiencing turbulent times due to disappointing and delayed figures. CEO Charles Liang emphasized in a recent release that neither the delayed filing nor the attacks by short-sellers are affecting the Company's production capabilities. Nevertheless, there is a certain weakness in margins, which recently led to a significant decline in the gross margin. By providing innovative, liquid-cooled AI servers, SMCI has secured a significant share of over 75% of the market segment. This strong market presence positions the Company excellently for future growth in the AI sector. These innovative solutions could become a long-term moat for the Company.
The uncertainties surrounding the delayed 10-K filing and the allegations by Hindenburg Research have shaken investor confidence. Barclays has lowered the target price from USD 693 to USD 438 and downgraded the stock. The analysts cite limited margin visibility and increased capital requirements as the main reasons. Nevertheless, the long-term potential in the rapidly growing AI market remains. The upcoming quarterly reports will be crucial to restore market participants' confidence and set the course for future growth. The stock is currently trading at USD 438.
In the dynamic world of artificial intelligence, there are significant differences in the development of companies. Intel is struggling with significant financial and strategic challenges, although it has been able to demonstrate some progress in cybersecurity and customized chips. VCI Global, on the other hand, is strategically expanding and focusing on AI-based technologies and global market placements, which is reflected in strong financial figures. Super Micro Computer is benefiting from the high demand for AI servers, particularly through its partnership with Nvidia, but is struggling with weak margins and delayed financial results. These companies reflect the opportunities and risks of the AI market.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.
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