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Revenue Generating Pure Play AI Company Knocking it Out of the Park
The demand for enterprise AI is rapidly growing with the global AI market expected to reach $170 billion USD by 2029. With China pulling out all the stops in an effort to become the de facto leader in AI development and implementation, North American enterprises need to deploy AI infrastructure as soon as possible in order to keep a top slot in the new digital world.
- North America generated more than 36.84% of the market share in 2022.
- The Asia Pacific market is expected to expand at the highest CAGR of 20.3% from 2023 to 2032.
- By solution, the services segment has accounted for a market share of over 39.64% in 2022.
This isn’t just a case of increasing the traditional IT infrastructure. AI computing demands performance and scale, requiring high-performance, high-bandwidth storage and networking. It draws heavily on physical machine resources and requires a whole new mind set to build. No small task. Luckily companies like Alset Capital (TSXV:KSUM) (OTC:ALSCF) (FSE:1R60), are working to sustain our lead.
Alset Capital’s 49% owned portfolio company, Cedarcross International Technologies Inc. (“Cedarcross”) is a pure-play high-performance artificial intelligence cloud computing provider, and through Cedarcross, Alset provides the necessary infrastructure needed to keep North America’s AI ecosystem thriving.
1) A North American AI Innovator
Alset covers the AI gamut. Its portfolio, in addition to Cedarcross, includes a 49% interest in Vertex AI Ventures, a company focused on identifying, acquiring, and licensing (IP) and providing data management services, etc.
As such, Alset has entered the AI market with a diverse multi-pronged approach:
Cedarcross arguably creates a considerable moat for Alset because it owns and operates some of the world’s most advanced GPU hardware required for AI computations. Providing access to the underlying algorithmic power developed by Nvidia, specifically its industry-leading Nvidia H100 HGX GPU’s, Cedarcross leverages its ability to provide scalable AI computing capabilities to enterprise clients in real time, without the upfront costs and long-term maintenance of physical infrastructure.
“The U.S. AI market size accounted for USD $103.7 billion in 2022 and is estimated to reach around USD $594 billion by 2032, growing at a CAGR of 19.1% from 2023 to 2032.“ Precedence Research // AI Market
2) Growing Revenue
Well on its way to becoming a significant provider of AI compute solutions, Cedarcross announced a formative deal when it entered into a two-year AI Computing leasing agreement with a revered third-party enterprise client that is anticipated to generate ~$4.0 million USD (C$5.5 mil) in revenue with approximately 80% gross margin over the life of the contract.
Paid Right Away
Cedarcross has structured the agreement for immediate income with a monthly payment plan, culminating in an estimated gross margin of ~$3.2 million USD (C$4.5 mil) by the end of the two-year term, representing an 80% margin.
Not done yet
On May 16, 2024, Cedarcross inked an agreement to distribute 64 Nvidia H100 HGX 8GPU servers, generating approximately C$26 million in revenue for the company.
This follows the April 22, 2024, announcement of a deal with Cedarcross for the sale of five Nvidia H100 HGX 8GPU servers to Ceti AI, which generated approximately C$2.32 million in gross revenue for Cedarcross.
Wait, There’s More
On June 13, 2024, Alset announced another H100 GPU server contract with a $91.7M option signed by Cedarcross, also with Ceti AI. The contract is for an initial three servers (for a purchase price of $1.37 million), with Ceti AI having an option to acquire an additional 200 servers (for a purchase price of $91.7 million) valid until September 30, 2024. The estimated gross margin from the initial $1.37 million purchase order is approximately $176k, and the estimated gross margin assuming all 200 H100 GPU servers are purchased is approximately $11,782,000.
This agreement marks an important advancement in Cedarcross’ distribution business within the high-performance computing (HPC) server market. Cedarcross has now secured cumulative revenue year to date of approximately $29.7 million through its HPC server distribution business vertical alone. These distribution agreements underscore the significant demand and strategic market positioning of Cedarcross in the HPC landscape.
And something else
On May 20, 2024, investee company Vertex AI Ventures Inc. (“Vertex”) entered into a strategic AI data engineering and automation partnership with Nom Nom AI Inc. (“Nom Nom”).
Vertex is using the deal to offer superior Data Management tools to companies, significantly improving their customers’ business intelligence and ability to innovate.
“By integrating Nom Nom’s patent pending data management technology, we are uniquely positioned to cultivate long-term client relationships by enhancing data quality, security and infrastructure performance.“Niko Kontogiannis, Director of Vertex, commented,
3) Expanding Market Presence
Cedarcross amped up its market power through a recent AI server distribution deal with Earthmade Computer Inc., an authorized distributor of Super Micro Computer Inc. (NASDAQ:SMCI)
Super Micro Computer, Inc., is no small fish trading on the NASDAQ under the symbol SMCI. It’s a global leader covering the tech gamut, pulling in approximately $3.6 billion USD in revenue in its latest reported quarter.
With this deal, Cedarcross expands its business portfolio with another vertical on top of its current computing leasing segment. Talk about win-win.
“The services segment held 39.64% share of the market, dominating in 2022 due to the convenience and scalability offered by AI as a service.“ Precedence Research
4) What’s in a Name
Alset seriously stepped up its game by appointing AI and tech industry heavyweights, Willy Sun and Michael Gord, to its AI Advisory Board.
Willy Sun has a long distinguished career in AI working with tech giants such as Google and Panasonic. He was a pioneer in speech emotion recognition, setting the bar for accuracy and illustrating its vast potential to revolutionize human-computer interaction.
Michael Gord, is a tech industry veteran, a serial entrepreneur and investor in Web 3.0. Michael’s illustrious track record includes three successful startup exits as well as four acquisitions. He has invested in over 70 portfolio companies with four of those going from seed stage to full-blown unicorns.
5) A Perfect Storm
Cutting-edge hardware and superior cloud AI solutions for enterprise clients. A rapidly expanding contract base with AI hardware hosted with a major North American data center provider boasting over 40 facilities. Deep industry relationships with key partners who have strong connections to leading suppliers and distributors such as Nvidia and Super Micro. Strategic AI service partnerships and a best-in-class AI advisory board. What’s not to like?
Conclusion
In the end, Alset’s visionary investment strategy, portfolio company’s robust revenue models and expert leadership could not only assist in securing North America’s future in AI, but also provide significant value growth for shareholders through its diverse portfolio of investee companies.
What are you waiting for? Contact Alset Capital today and to participate in their success! Alset Capital (TSXV:KSUM) (OTC:ALSCF) (FSE:1R60), www.alsetai.com ir@alsetai.com
Disclaimer:
Alset Capital Inc. (“Alset Capital” or the “Company”) has paid for and sponsored this coverage. Omni8 Communications Inc. has been paid CAD$380,000 plus GST to provide online advertisement coverage for Alset Capital for four months beginning April 1st 2024. The coverage includes, but is not limited to, digital and social media marketing, investor outreach, and content distribution about Alset Capital. We do not own shares of Alset Capital. Because Alset Capital has paid us for our marketing and advertising services, and we are compensated by the Company, you must recognize the inherent conflict of interest involved that may influence our perspective of Alset Capital. Because we are paid by the Company, and therefore we are not independent reporters, our coverage of Alset Capital may highlight many of its positive aspects, and not necessarily the potential risks to its business or to investing in its stock.
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Sources
https://www.scientificamerican.com/article/the-ai-boom-could-use-a-shocking-amount-of-electricity/
https://www.bnnbloomberg.ca/kkr-bain-capital-plow-into-asia-data-centers-on-ai-cloud-boom-1.2021802
https://store.supermicro.com/about-supermicro
https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html
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