Super Micro shares fall on planned $2 billion convertible debt offering
The Super Micro Computer headquarters in San Jose, California, on Dec. 3, 2024.
David Paul Morris | Bloomberg | Getty Images
Super Micro Computer shares fell about 10% on Monday after the server maker said it plans to offer $2 billion in convertible notes, maturing in 2030.
A company's stock often falls on the announcement of a convertible offering because the eventual conversion to equity could dilute existing shareholders' stakes.
Super Micro, which has seen its business boom due to soaring demand for Nvidia's artificial intelligence processors, said in a press release that it plans to use the proceeds from the offering for "general corporate purposes, including to fund working capital for growth and business expansion." It also said it would spend about $200 million to repurchase its stock from the note issuers.
Even after Monday's slide, Super Micro shares are up close to 40% so far in 2025 as the company remains one of a handful of server makers that can sell systems based around new chips from Nvidia, Advanced Micro Devices and Intel soon after they start shipping. The stock has been viewed by Wall Street as an AI pure play that will appreciate with tech megacap companies expected to spend hundreds of billions of dollars on data centers to support AI workloads.
Super Micro also secured a major contract with a data center in Saudi Arabia when President Donald Trump visited the Middle East in May.
Super Micro "has emerged as a market leader in AI-optimized infrastructure," Raymond James analysts wrote in a report last month, saying 70% of the company's revenue was attributable to AI. The analysts recommend buying the stock.
Investors soured on Super Micro in March and April on concerns about tariffs, and in May the company slashed its fiscal 2025 guidance and chose not to reiterate its previous forecast for $40 billion in fiscal 2026 sales due to tariff and AI chip uncertainty.
The stock has recouped some of those losses but is still trading well below its high for the year reached in February.
Super Micro had a tumultuous 2024 largely because of accusations of accounting irregularities, and was forced to refile financials with the Securities and Exchange Commission in order to avoid delisting from the Nasdaq. Super Micro also named a new auditor, removed its chief financial officer and named additional members to its board of directors.
Don’t miss these insights from CNBC PRO
Latest World News copy
- Trump announces Israel-Iran ceasefire timeline he says will end the war: Live updatesIran's armed forces said they struck a U.S. military base in response to the bombings of key Iranian nuclear facilities over the weekend.
- Oil prices fall 7% after Iran strike on U.S. base in Qatar leaves no reported casualtiesOil markets are reacting to the effect of a U.S. decision to directly enter the Iran-Israel conflict.
- Airlines divert, cancel more Middle East flights after Iran attacks U.S. military baseAirlines diverted flights in the Middle East on Monday after Iran's armed forces said the country launched a missile strike on a U.S. military base in Qatar.
- Iran’s parliament backs blocking Strait of Hormuz. Its closure would alienate Tehran furtherThe decision to close the waterway now rests with the country's national security council.
- 'Fire up the deportation planes': Trump official praises Supreme Court rulingPlaintiffs in the case want the right to challenge deportations to countries other than their own because of the risk of persecution, torture or death.
- How high oil could go if Iran closes the Strait of Hormuz, according to Goldman Sachs and othersEnergy analysts warn that investors shouldn't be complacent about the risk to oil supplies as the conflict in the Middle East escalates.