While
chip
darling
Nvidia
has
grabbed
headlines
for
its
impressive
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
surged
over
95%
year-to-date
as
investors
have
started
to
take
notice
of
its
potential.
While
the
company
has
been
listed
for
less
than
a
year
on
the
Frankfurt
Stock
Exchange,
its
roots
date
back
to
1999,
when
it
was
founded
as
a
spin-off
from
the
Karlsruhe
Institute
of
Technology
in
Germany.
The
small-cap
firm,
with
sales
totaling
52
million
euros
($56
million)
in
the
first
half
of
last
year,
bagged
a
300
million
euro
($327
million)
contract
to
build
the
first
ultra-powerful supercomputer
on
the
continent
The
system,
Jupiter,
is
expected
to
be
capable
of
at
least
one
quintillion
—
or
billion
billion
—
calculations
per
second.
JY0-DE
1Y
line
How
are
investors
taking
it?
Hendrik
Leber,
fund
manager
at
Acatis
Datini
Valueflex
Fonds,
owns
ParTec
shares
and
says
he
sees
the
company
as
a
“very
clear”
investment
opportunity.
“Europe
wants
to
spend
a
couple
of
billion
on
supercomputing
in
the
next
couple
of
years,
and
they
want
to
spend
it
locally
in
the
EU.
ParTec
has
the
technology
to
do
it
and
will
be
well-positioned
for
these
public
tenders,”
Leber
added.
What
exactly
does
ParTec
do?
ParTec,
with
between
60
and
70
employees,
provides
the
software
systems
needed
to
set
up
supercomputers,
primarily
for
research.
“Their
main
product
is
software
‘middleware’,
and
possibly
quantum
computers
in
the
future,”
senior
equity
analyst
Miguel
Lago
Mascato
of
equity
research
firm
Montega
told
CNBC
Pro.
Lago
Mascato
expects
the
company’s
shares
to
rise
by
another
21%
to
130
euros
over
the
next
12
months.
While
competitors
like
Hewlett
Packard
can
also
bid
on
supercomputing
projects,
Lago
Mascato
said
ParTec’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
will
“significantly
strengthen”
its
equity
base.
However,
some
are
skeptical
that
the
company
will
be
able
to
monetize
its
patent
portfolio.
“At
this
point
in
time,
our
visibility
for
ParTec
realizing
licensing
income
from
their
patent
portfolio
in
the
near
future
is
very
low,”
Lago
Mascato
said
bluntly.
However,
fund
manager
Leber
dismissed
concerns
around
the
lack
of
royalties
and
pointed
toward
the
300
million
euro
Jupiter
contract
as
an
example
of
real
cash
flow.
“Orders
are
very
real
and
economic
profits
are
also
very
real,”
Leber
said.
“I
don’t
care
about
synthetic
valuations
of
patent
portfolios.
I
see
the
very
realistic
computing
centers,
and
that’s
where
the
revenues
and
profits
come
from.”
Liquidity
risks
Another
risk
factor
investors
should
be
aware
of
with
ParTec
is
the
limited
liquidity
in
its
shares.
Less
than
13%
of
the
company’s
shares
are
freely
floated.
Due
to
the
thin
trading
volumes,
Leber
noted
that
even
a
2
million
euro
stock
placement
took
about
a
month
to
complete.
This
lack
of
liquidity
means
the
stock
price
may
not
always
efficiently
reflect
the
company’s
underlying
value.
Future
opportunities
with
AI
ParTec
sees
significant
opportunities
beyond
traditional
supercomputing
by
providing
systems
tailored
to
train
large
AI
models.
Bernhard
Frohwitter,
chief
executive
of
ParTec,
told
CNBC
Pro
that
there
was
significant
demand
for
systems
with
contextual
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
require
“interior
logic”
in
physicals,
mathematics,
and
mechanics
instead.
ParTec
is
already
“under
enormous
pressure
from
institutions,
governments
even,
to
build
such
machines”
capable
of
training
these
foundation
AI
models,
Frohwitter
added.
“We
are
in
the
process.
In
a
few
months,
we
will
offer
artificial
intelligence
machines
that
can
do
the
training,
data
management,
inference,
and
all
that
together,”
he
said.
