SpaceX Is Becoming a "Neocloud." Here's the Beaten-Down AI Stock 75% Off Its Highs That Could Benefit the Most.

On Monday, a Wall Street analyst wrote favorably about certain semiconductor stocks with a vendor relationship to Elon Musk's Space Exploration Technologies (NASDAQ: SPCX), or SpaceX.

While several companies in SpaceX's supply chain were mentioned as beneficiaries, most of the mentioned stocks are at or near their all-time highs. However, one AI infrastructure stock should also benefit, perhaps even more than the others, and it's the only stock in the group trading at a reasonable valuation, 75% below its all-time high.

Why SpaceX vendors are poised to benefit

On Monday, GF Securities analysts Jeff Pu and Alicia Xia wrote a note saying that, as SpaceX has begun renting out excess computing power to other AI companies, and given that it just raised a whopping $86 billion in last week's initial public offering, there shouldn't be any obstacle to SpaceX building a massive amount of computing infrastructure. The theory is that this will benefit AI hardware makers that already have a strong relationship with SpaceX.

SpaceX's recent acquisition of Cursor should help improve both SpaceX's Grok models and Cursor's internal models, boosting demand for SpaceX's internal AI computing needs. But even if that doesn't work out, SpaceX's recent decision to rent out its capacity to other rival AI companies and hyperscalers should be a promising "fallback" option.

According to analysts, SpaceX brought up its massive Colossus 1 and 2 AI data centers in just 122 days and 91 days, respectively -- a significantly shorter time frame than a typical data center build-out. Shorter construction durations mean lower costs and increased revenue, suggesting SpaceX's burgeoning "neocloud" business is likely highly profitable.

Super Micro Computer has been a key partner in Colossus

The company most responsible for SpaceX getting Colossus up in record time is Super Micro Computer (NASDAQ: SMCI).

The controversial server maker is a U.S. company that has had to compete with low-cost Asian rivals in the server business. To do so, CEO Charles Liang has focused on key features, such as lower energy leakage, as well as on being faster than rivals at building and delivering customized server racks.

Supermicro's "premium" server status has often been a staple in enterprise on-premises data centers, as well as newer AI-oriented "neoclouds." Large cloud hyperscalers with in-house server assembly and data center expertise typically use lower-cost Asian "white box" server providers.

However, it appears Supermicro's low-power, customized, and fast server racks caught Elon Musk's eye, with Musk using them in both the SpaceX Colossus I and II AI data centers. Supermicro noted that in its December quarter, one major customer accounted for a whopping 63% of its revenue. This was very likely xAI, now SpaceX, given that the Colossus II data center became operational in January. Musk noted that Colossus II was the first 1 GW training cluster ever built and that xAI would expand it to 1.5 GW by April.

Given that SpaceX just received a fresh cash injection from its IPO, just purchased AI coding leader Cursor AI, and can apparently rent spare capacity to others, it is highly likely to continue buying lots of servers from Supermicro going forward.

Image source: Getty Images.

Why Supermicro can be had at a discount

Unlike the other beneficiaries of SpaceX's build-out, Supermicro can be had at a reasonable-looking valuation of 18 times trailing earnings and a stock price 75% below its all-time highs set back in 2024.

The company has endured two major scandals in the past two years, along with one overriding financial concern. In 2024, Supermicro's auditor resigned after a short-seller questioned the integrity of its financials. Then, just a few months ago, two Supermicro employees, one of whom was a board member, along with an outside contractor, were indicted for a scheme to smuggle its servers into China through third-party intermediaries, in violation of export restrictions.

Furthermore, Supermicro's gross margins have come under pressure over the past couple of years due to both lower margins on expensive AI servers and, as noted earlier, likely very high SpaceX bargaining power.

However, Supermicro appears to be putting these controversies behind it. Whatever accounting practices Supermicro engaged in that led to its prior auditor resigning, the new auditor, BDO, signed off on Supermicro's books in early 2025. Likely, the company's revenue recognition or back-office processes were unorthodox, but Supermicro is a 33-year-old company with top-tier tech clients, such as SpaceX. So, it doesn't appear there was anything fraudulent.

As for the recent server-smuggling case to China, Supermicro actually aided authorities in uncovering the scheme, so it does not appear to be a violation by the company. Moreover, Supermicro helped thwart another such plot in late May, seeming to validate its seriousness in combating smuggling and validating its innocence in the prior case.

On the margin front, Supermicro recorded a huge 3.6-percentage-point increase from the December quarter to 9.9% in gross margins during its March quarter. Now, one could say that the low gross margins of the December quarter were in fact due to SpaceX's massive bulk buying and that those margins could remain low for SpaceX purchases going forward.

However, Supermicro is likely to lower costs as it repeats these massive projects and fills out its manufacturing capacity. That should improve gross margins solely due to utilization. Furthermore, working with Musk is giving Supermicro a bit of a "brand halo," which the company can use to charge higher prices to other smaller customers.

The SpaceX partnership should serve Supermicro well

Despite the initial, early-stage gross margin hit, Supermicro seems poised to benefit from its partnership with SpaceX, given the high future SpaceX demand and the reputational boost from working with Musk. For those willing to bear the risk of another governance slip-up, Supermicro appears the most reasonably priced of the major AI hardware stocks today.

Billy Duberstein and/or his clients have positions in Super Micro Computer. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.