Currently making a value investment in $AUR ๐บ๐ธ $ABCL ๐บ๐ธ $AIRJ ๐บ๐ธ $FTC ๐ด๓ ง๓ ข๓ ฅ๓ ฎ๓ ง๓ ฟ $HPE ๐บ๐ธ
I invest in the growth potential of small-cap tech stocks
$INV: Morpheus Research Short Report
My conclusion is:
1. Accelsius two phase liquid cooling has real potential.
2. DarkNX is most likely a fraud, at best a fake it till you make it smoke and mirrors.
Acceptance for datacenter components has a very high bar. No want ones to take a risk on multi-billion dollar datacenter buildout delayed by picking the wrong 500m cooling supplier. Accelsius is under going qualification and reviews right now. This means two things:
1. No established datacenter lead will risk their career before qualifications.
2. There are many other conservative but subar solutions. If innovative solution gets qualified, it has a chance to disrupting an establish market.
This makes $INV a very binary stock based upon qualification. I will explain both why DarkNX is most likely a fraud and why Accelsius' two phase cooling has potential.
DarkNX
The team at DarkNX does not have much of a career to risk. If they fail the datacenter project then they start back right at where they were. If succeed the datacenter project then this is a huge breakthrough for their careers.
Before DarkNX's website conveniently removed their Seattle office address, I had Googled it. I know that part of Seattle. It's mostly warehouses and abandoned industrial buildings. I'll keep it simple and say this: based on the founders LinkedIn experience, most datacenters wouldn't hire them to even be a technician or manage an receivables account.
Accelsius
Accelsius's two phase cooling is a commercialization attempt of technology that had been in the works at Nokia Bell Labs for over 10 years (1). Accelsius had been the IP from Nokia Bell Labs which came from Alcatel-Lucent <- Lucent Technologies <- AT&T / Bell System. Bell Labs had invented the transistor, Unix, C programming language, cellular networking, fiber optics, lasers. Nokia holds some legacy but valuable IP, just look at their stock price. But this is no guarantee does not guarantee all their IP can be commercialized.
Here are how far along they are in their commercialization:
1. Will be at Nvidia GTC this year debuting their two phase cooling for a 150kW rack (2). This is sufficient for first generation of Vera Rubin NVL72 but not NVL144. For qualification process, it's not useful to be ambitions. Get your foot in the door first then you will have many opportunities.
2. Accelsius is in Nvidia's incubation program (3).
3. Universities are more likely to try out prototypes. Texas Advanced Computing Center (TACC) has used some of their prototypes in the 2024 (4). TACC isn't upgrading to every new generation of GPUs so their H100 build using Accelsius 2 stage cooling. I know TACC is legit since I went to University of Texas and TACC is affliated with University of Texas. I'm a had college classmates work part time jobs at TACC and there were professors with projects there.
In contrast to DarkNX's nothing to risk career starters, Accelsius has:
1. CTO Richard Bonner had worked 18 years at Advanced Cooling Technologies and rose to VP of R&D (7). Advanced Cooling Technologies is a $2.6B private company under Blackstone's private equity holdings (6).
2. CEO Josh Claman was previously VP of Corporate Development at Dell and has been in hardware industry for 30 years working sales (5).
3. COO, Matthew Cruce, worked 12 years at Dell to become the Director of Server Supply Chain (8).
4. SVP of Engineering Jeff Taus, worked at Dell for 13 years to become a Distinguished Engineer or equivalent to Principal Engineer in Silicon Valley lingo.
These people have worked at Accelsius for 4 years and are not brewing a scam for 4 years of their lives.
Why Did Accelsius Work with DarkNX
Accelsius is in the qualification phase, Microsoft is not knocking on their door on day 1. Are they going to say no to a startup datacenter builder like DarkNX? No because Accelsius doesn't pay DarkNX or anything, there's no risk besides making a publicity announcement which has now backfired. However, $CRWV pivoted out as a failed ETH miner. As another startup, you generally give other startups a chance.
Short Term Negative Implications
$INV may face some pain from this short report because there's no questioning that DarkNX is a fraud. Anywhere from 2.84 to 5.67 are possible drops, it's already 5.15 at time of this writing.
Long Term Outlook
There's no guarantee that Accelcius owned 43.2% by $INV will succeed at commercialization, and I am sizing my $INV as a small 0.05% position accordingly. I might DCA a little during dips but it will be controlled to a max of 0.15%. $INV still has binary risk but it's commercialization process is not set back by Morpheus Research's short report centered around DarkNX which was a tail chance for them anyways
Now, $INV is not a Silicon Valley move fast culture startup but compared to it's competitors like Vertiv, it moves faster. There's no two stage cooling startup in Silicon Valley with much traction so the corresponding competition moves slower. You can read my original take on the liquid cooling industry: https://t.co/i6ELQ9G3dB