While chip darling Nvidia has grabbed headlines for its stellar stock performance driven by excitement around artificial intelligence, an under-the-radar German company has quietly seen its shares nearly double in 2024. ParTec, a developer of supercomputing systems, has added more than 95 % year-to-date as investors have started to take notice of its potential. While the company has been listed on the Frankfurt Stock Exchange for less than a year, its roots date back to 1999, when it was founded as a spin-off from Germany’s Karlsruhe Institute of Technology. The small-cap firm, with sales totaling 52 million euros ($56 million) in the first half of last year, won a 300 million euro ($327 million) contract to build the continent’s first supercomputer, the Jupiter system. It is expected to be capable of at least one quintillion — or billion billion — calculations per second. How are JY0-DE 1Y line investors taking it? Acatis Datini Valueflex Fonds fund manager Hendrik Leber owns shares in ParTec and says he sees the company as a “very clear” investment opportunity. Labor added that “Europe wants to spend a few billion on supercomputing over the next few years, and they want to spend it locally in the EU. ParTec has the technology to do that and they’re going to put it out for public tenders.” Will be in a good position.” . What exactly does ParTec do? ParTec, with between 60 and 70 employees, provides the software systems needed to configure supercomputers, primarily for research. “Their core product is software ‘middleware,’ and possibly quantum computers in the future,” Miguel Lago Mascato, senior equity analyst at equity research firm Montega, told CNBC Pro. Lago Moscato expects the company’s shares to rise another 21 percent to 130 euros in the next 12 months. While competitors such as Hewlett-Packard can also bid on supercomputing projects, Lago Muscato said Partic’s middleware gives them a “unique selling point.” Patents and royalties Earlier this year, independent auditors valued ParTec’s 150 patents for building and designing supercomputers at 767 million euros, which the company expects to “significantly strengthen” its equity base. will be done However, some doubt the company will be able to monetize its patent portfolio. “At this time, we have little visibility into ParTec realizing licensing revenue from its patent portfolio in the near future,” Lago Muscato put it bluntly. However, fund manager Labor dismissed concerns about a lack of royalties and pointed to the €300 million Jupiter deal as an example of real cash flow. Labor said the orders are very real and the economic returns are very real. “I don’t care about artificial valuations of patent portfolios. I see very realistic computing centers, and that’s where the revenue and profits come from.” Liquidity Risks Another risk factor investors should be aware of with ParTec is the limited liquidity of its shares. Less than 13% of the company’s shares float freely. Because of the low trading volume, Labor noted that even a €2 million stock placement took about a month to complete. Lack of liquidity means that the stock price does not always effectively reflect the underlying value of the company. Future Opportunities with AI ParTec sees significant opportunities beyond traditional supercomputing by providing systems designed to train large AI models. Bernhard Frohwitter, chief executive of ParTec, told CNBC Pro that there is significant demand for systems with context understanding beyond just language models. Large language models, such as those behind ChatGPT, generate text, images and videos by predicting the next word or pixel in a sequence. However, Frohwitter said companies are demanding AI models that instead require “internal logic” in physics, math and mechanics. Frohwitter added that ParTec is already under “a lot of pressure from institutions, governments to build such machines”. “We are in the process. In a few months, we will offer artificial intelligence machines that can do training, data management, inference and all of that at the same time,” he said.
