Super Micro Computer Stock (SMCI) Sinks on $2B Convertible Notes Offering
Shares of Super Micro Computer (SMCI) sank on Monday after the AI hardware company announced that it plans to raise $2 billion through convertible notes that will mature in 2030. Investors typically react negatively to such offerings since converting these notes into stock later on can dilute current shareholders. The company said that the funds will be used for general business purposes, and that it plans to spend around $200 million to buy back some of its stock from the note holders.
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Despite Monday's drop, Super Micro stock is still up nearly 40% in 2025. The company is considered one of the few able to quickly offer server systems using the latest chips from Nvidia (NVDA), AMD (AMD), and Intel (INTC), which has made it a popular 'pure play' investment in the AI space. Tech giants are expected to spend heavily on AI-powered data centers, and Super Micro's role in providing the infrastructure for these systems has helped drive its strong performance. In May, the company also secured a major deal with a Saudi Arabian data center during President Donald Trump's visit to the region.
Still, the stock has seen its share of volatility. In early 2024, concerns about accounting issues forced Super Micro to refile financial reports with the SEC, change auditors, remove its CFO, and add new board members to avoid delisting from the Nasdaq. Investor sentiment also took a hit in the spring over tariff-related uncertainty and weaker guidance. While some of those losses have been recovered, the stock remains well below its February highs. Nevertheless, analysts at Raymond James recently praised Super Micro's position in the AI market by noting that 70% of its revenue is tied to AI and recommending the stock as a buy.
Is SMCI Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SMCI stock based on six Buys, five Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average SMCI price target of $40.83 per share implies that shares are fairly valued.
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