TSS was initially published as one of our 7investing Community's New Ideas in November 2024

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Background

The following comes directly from our initial Community recommendation. 7investing's opinions may differ from the person(s) who submitted this community research.

TSS provides integration technology services to implement, operate, and maintain information technology systems to enterprises and users. It’s essentially what SMCI does now, but much smaller and better growth. The growth in AI equates to demand for data centers. It’s that simple. With SMCI in the negative light now, the opportunity for gaining mkt share is elevated. TSS is based in Round Rock, TX, only a few miles from Dell HQ.

The company, which has 1 customer (Dell) accounting for more than 95% of revenue, is up more than 2,500% YTD, and currently under a $200m mkt cap would cause most investors to immediately disregard it as too risky. However, it’s veteran management team are executers, the company just won Dell’s Best Deployment Partner award last week, and extended their relationship to a multi-year contract. TSS announced last week they are spending $25-30m to build a new facility to handle the demand. Rumors suggest they are working with Elon’s xAI project as well.

They are profitable, debt-free, and growing. Management presented a bullish overview at the LD Micro event on 10/30 and chuckled regarding how strong earnings will be for Q3. Earnings are on 11/14. It’s certainly risky, but the risks have been reduced with recent positive catalysts. Certainly less risky than SMCI, a company 100x their mkt cap.