This is only in the very early innings: ["But in the past couple of days, reports from Bloomberg and the New York Times have provided more details about what OpenAI in particular is trying to get from the government: support in its quest to build data centers with power requirements of five gigawatts each.
Five gigawatts is an astonishingly large amount of power. It’s the output of around five nuclear reactors—the kind of power you need for a whole major city like Miami. It’s as much as 100 times the requirement of a standard large data center. The Times reported that OpenAI’s 5GW proposal drew laughter from a Japanese official."] https://fortune.com/2024/09/27/openai-5gw-data-centers-altman-power-requirements-nuclear/
Not to see dependance on a single customer as a risk just seems to be too naive. From memory I could find so many examples where this backfired... Besides how do we know we are in early innings of the AI boom? We could well be past the (local) peak. This company certainly was a great opportunity under $1 but buying it now looks like the same type of trap as say buying $ALAR in $30s proved to be.
In theory, I agree (and in fact I do mention it as a risk), but they have a pretty symbiotic relation with Dell in which Dell also gets a lot out of the relationship. Unless TSS fails to execute, Dell has no reason to cut them lose.
I think you need to do more research on in relation to if we are in the early innings of the AI boom in relation to what TSSI actually does and what services they provide. I feel you haven't done enough research.
2.) Yes they are getting tons of revenue from Dell but also keep in mind the guarantees DELL is giving them INCLUDING the free money they have provided them to expand.
3.) The company is already rumored to have signed a multi million dollar deal with Microsoft, they have been in talks with Amazon and also the CEO publicy stated SMCI has contacted them.
4.) They company has also stated they need 4 X the power and they need a bigger facility. Your comparison to ALAR does not even make sense or a proper argument.
Thanks STop for the reminder of some of the rumors, didn't want to include these in the article as I can't confirm them. There will be a huge build out, but what I'm looking for is next year, enterprise, MDC and especially facilities management to take off. The latter isn't dependent on a singular build out, however epic the proportions are, but is a steady, ongoing business generating much higher margins (operating margins of the segment was 47% in Q2).
No one talks about what multiple sb applied. Growth is exploding, but for how long? 24 months and then what. They don’t actually have their own tangible product. So what a sustained appropriate PE multiple?
Other note is company noted they expect a better ‘25 and already working on contracts with non Dell companies for 25 and 26. So yes they should get to $1.00 run rate this yr. Can they get to $1.50-$2.00 in 25 if large non Dell contracts are won, and will margins be higher. I have not heard about margins on non Dell contracts.
We get the enterprise market going and facilities management, which generates high margins so I'm not too worried about growth after xAI. Margins on Dell business? 97% of TSS business is with Dell, so these are the margins.
I get 97% of business is Dell. But both the company and Dell both want TSSI to grow the non Dell business significantly. In fact the CEO noted he is incentivized to do so, despite the Dell business growing to even a larger % of the business this qtr. My thought was the direct, non Dell business, could result in margin expansion as well as leveraging costs overall.
You're right, but that will happen from a very small basis, so not really material for the moment. And they got their hands more than full with xAI at the moment..
This is only in the very early innings: ["But in the past couple of days, reports from Bloomberg and the New York Times have provided more details about what OpenAI in particular is trying to get from the government: support in its quest to build data centers with power requirements of five gigawatts each.
Five gigawatts is an astonishingly large amount of power. It’s the output of around five nuclear reactors—the kind of power you need for a whole major city like Miami. It’s as much as 100 times the requirement of a standard large data center. The Times reported that OpenAI’s 5GW proposal drew laughter from a Japanese official."] https://fortune.com/2024/09/27/openai-5gw-data-centers-altman-power-requirements-nuclear/
What better reason to buy an picks and shovels AI play like TSS Inc: "Enter consulting giant Bain & Company and a big, new forecast: “The market for AI-related hardware and software is expected to grow between 40% and 55% annually, reaching between $780 billion and $990 billion by 2027.” https://finance.yahoo.com/news/a-big-ai-prediction-re-juices-the-trade-morning-brief-095550869.html
Not to see dependance on a single customer as a risk just seems to be too naive. From memory I could find so many examples where this backfired... Besides how do we know we are in early innings of the AI boom? We could well be past the (local) peak. This company certainly was a great opportunity under $1 but buying it now looks like the same type of trap as say buying $ALAR in $30s proved to be.
In theory, I agree (and in fact I do mention it as a risk), but they have a pretty symbiotic relation with Dell in which Dell also gets a lot out of the relationship. Unless TSS fails to execute, Dell has no reason to cut them lose.
I think you need to do more research on in relation to if we are in the early innings of the AI boom in relation to what TSSI actually does and what services they provide. I feel you haven't done enough research.
2.) Yes they are getting tons of revenue from Dell but also keep in mind the guarantees DELL is giving them INCLUDING the free money they have provided them to expand.
3.) The company is already rumored to have signed a multi million dollar deal with Microsoft, they have been in talks with Amazon and also the CEO publicy stated SMCI has contacted them.
4.) They company has also stated they need 4 X the power and they need a bigger facility. Your comparison to ALAR does not even make sense or a proper argument.
Thanks STop for the reminder of some of the rumors, didn't want to include these in the article as I can't confirm them. There will be a huge build out, but what I'm looking for is next year, enterprise, MDC and especially facilities management to take off. The latter isn't dependent on a singular build out, however epic the proportions are, but is a steady, ongoing business generating much higher margins (operating margins of the segment was 47% in Q2).
No one talks about what multiple sb applied. Growth is exploding, but for how long? 24 months and then what. They don’t actually have their own tangible product. So what a sustained appropriate PE multiple?
Other note is company noted they expect a better ‘25 and already working on contracts with non Dell companies for 25 and 26. So yes they should get to $1.00 run rate this yr. Can they get to $1.50-$2.00 in 25 if large non Dell contracts are won, and will margins be higher. I have not heard about margins on non Dell contracts.
We get the enterprise market going and facilities management, which generates high margins so I'm not too worried about growth after xAI. Margins on Dell business? 97% of TSS business is with Dell, so these are the margins.
I get 97% of business is Dell. But both the company and Dell both want TSSI to grow the non Dell business significantly. In fact the CEO noted he is incentivized to do so, despite the Dell business growing to even a larger % of the business this qtr. My thought was the direct, non Dell business, could result in margin expansion as well as leveraging costs overall.
You're right, but that will happen from a very small basis, so not really material for the moment. And they got their hands more than full with xAI at the moment..