Whereas chip darling Nvidia has grabbed headlines for its spectacular inventory efficiency, pushed by pleasure round synthetic intelligence, an under-the-radar German firm has quietly seen its shares almost double in 2024. ParTec , a developer of supercomputing methods, has surged over 95% year-to-date as traders have began to take discover of its potential. Whereas the corporate has been listed for lower than a 12 months on the Frankfurt Inventory Trade, its roots date again to 1999, when it was based as a spin-off from the Karlsruhe Institute of Know-how in Germany. The small-cap agency, with gross sales totaling 52 million euros ($56 million) within the first half of final 12 months, bagged a 300 million euro ($327 million) contract to construct the primary ultra-powerful supercomputer on the continent The system, Jupiter, is anticipated to be able to at the very least one quintillion — or billion billion — calculations per second. JY0-DE 1Y line How are traders taking it? Hendrik Leber, fund supervisor at Acatis Datini Valueflex Fonds, owns ParTec shares and says he sees the corporate as a “very clear” funding alternative. “Europe needs to spend a few billion on supercomputing within the subsequent couple of years, and so they wish to spend it regionally within the EU. ParTec has the expertise to do it and shall be well-positioned for these public tenders,” Leber added. What precisely does ParTec do? ParTec, with between 60 and 70 staff, gives the software program methods wanted to arrange supercomputers, primarily for analysis. “Their most important product is software program ‘middleware’, and presumably quantum computer systems sooner or later,” senior fairness analyst Miguel Lago Mascato of fairness analysis agency Montega advised CNBC Professional. Lago Mascato expects the corporate’s shares to rise by one other 21% to 130 euros over the subsequent 12 months. Whereas opponents like Hewlett Packard may bid on supercomputing tasks, Lago Mascato stated ParTec’s middleware offers them a “distinctive promoting level.” Patents and royalties Earlier this 12 months, unbiased auditors valued ParTec’s 150 patents for constructing and designing supercomputers at 767 million euros, which the corporate expects will “considerably strengthen” its fairness base. Nevertheless, some are skeptical that the corporate will be capable to monetize its patent portfolio. “At this time limit, our visibility for ParTec realizing licensing earnings from their patent portfolio within the close to future could be very low,” Lago Mascato stated bluntly. Nevertheless, fund supervisor Leber dismissed issues across the lack of royalties and pointed towards the 300 million euro Jupiter contract for instance of actual money circulation. “Orders are very actual and financial income are additionally very actual,” Leber stated. “I do not care about artificial valuations of patent portfolios. I see the very life like computing facilities, and that is the place the revenues and income come from.” Liquidity dangers One other threat issue traders ought to pay attention to with ParTec is the restricted liquidity in its shares. Lower than 13% of the corporate’s shares are freely floated. As a result of skinny buying and selling volumes, Leber famous that even a 2 million euro inventory placement took a few month to finish. This lack of liquidity means the inventory worth could not at all times effectively replicate the corporate’s underlying worth. Future alternatives with AI ParTec sees vital alternatives past conventional supercomputing by offering methods tailor-made to coach massive AI fashions. Bernhard Frohwitter, chief govt of ParTec, advised CNBC Professional that there was vital demand for methods with contextual understanding past simply language fashions. Massive language fashions, comparable to these behind ChatGPT, generate textual content, pictures, and movies by predicting the subsequent phrase or pixel in a sequence. Nevertheless, Frohwitter stated corporations are demanding AI fashions that require “inside logic” in physicals, arithmetic, and mechanics as a substitute. ParTec is already “underneath huge stress from establishments, governments even, to construct such machines” able to coaching these basis AI fashions, Frohwitter added. “We’re within the course of. In a number of months, we are going to provide synthetic intelligence machines that may do the coaching, information administration, inference, and all that collectively,” he stated.