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In what is a testament to the superiority of NVIDIA's commercial GPUs and the time-related tradeoff involved in designing and optimizing a custom ASIC, Apple is finally jumping onto NVIDIA's GPU bandwagon with a sizable order, with Super Micro Computer and Dell expected to materially benefit from these orders.
The hidden cost of in-house ASIC design is - time.
The reality is that $NVDA merchant silicon is so ahead for most AI workloads that you can’t afford to wait on the sidelines while you develop your own slightly improved and optimized ASIC design. https://t.co/mDeCVNGblh
— Chips & Wafers (@ChipsandWafers) March 25, 2025
To wit, Loop Capital has now disclosed that Apple has officially entered the "large server cluster Gen AI game," with the "Siri kerfuffle" prompting a strategy change at the company that now seemingly favors NVIDIA's commercial GPUs:
"AAPL [Apple] is in the process of placing orders for ~$1.0B of GB300NVL72’s (or ~250 servers at $3.7M - $4.0M each) comprised of both SMCI [Super Micro Computer] & DELL."
Loop Capital believes that this order likely relates to a "Gen AI LLM cluster" and that "Siri’s ongoing issues may have been [prompted by] AAPL’s proclivity to use AI / ML (machine learning) vs Gen AI heretofore." The note goes on:
"It appears that our latest work could represent a shift in AAPL’s thinking towards using Gen AI vs AI/ML."
For the benefit of those who might not be aware, Siri's recent AI-powered features have largely fallen flat, with Apple taking the rare step earlier in March of admitting as much in sugar-coated words:
"We’ve also been working on a more personalised Siri, giving it more awareness of your personal context, as well as the ability to take action for you within and across your apps. It’s going to take us longer than we thought to deliver on these features and we anticipate rolling them out in the coming year."
Of course, this order represents a win for Super Micro Computer and Dell, both of whom are currently the leading suppliers of AI server racks.
As we noted recently, Super Micro Computer is currently at the apex of the hardware stocks leadership board, with gains of ~40 percent so far this year.
This rally has now prompted Goldman Sachs to grow cautious on Super Micro Computer's near-term prospects, with the analyst Michael Ng slashing the rating on Super Micro Computer shares to 'Sell' from 'Neutral,' and lowering the stock price target for the firm to $32 (which reflects 9x NTM+1Y EPS) vs. the previous peg at $40 (based on a 10x multiple).
The analyst also expects "SMCI's valuation premium (12X NTM+1 P/E) to server OEM peers (e.g., DELL at 9x) to converge over time on lack of differentiation in AI server product & risks from customer & supplier concentration."
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