Super Micro Computer, Inc. (NASDAQ: SMCI), a major player in IT solutions for AI, cloud, storage, and 5G/Edge, has announced its intention to offer $1.5 billion in convertible senior notes due 2029. The offering, subject to market conditions, will be available to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
The Convertible Notes will be senior, unsecured obligations of the Company, accruing interest semi-annually. They will mature on March 1, 2029, with conversion conditions applying until September 1, 2028, and becoming convertible thereafter. The Company will settle conversions in cash, shares of common stock, or a combination at its discretion, with initial terms to be determined during pricing negotiations.
Super Micro plans to enter into capped call transactions with financial institutions to manage potential dilution and offset cash payments exceeding the principal amount of the Convertible Notes. The Company expects to use a portion of the proceeds to fund the cost of these transactions, with the remainder allocated for general corporate purposes and working capital.
This offering is not an offer to sell or a solicitation of an offer to buy, and the Convertible Notes and shares issuable upon conversion have not been registered under the Securities Act or any other jurisdiction. Any offer will be made through a private offering memorandum.
Super Micro Computer Stock: A Buy Opportunity?
As macroeconomic worries rise, artificial intelligence (AI) stocks saw a broad retreat in Wednesday’s trading session. The sector faces added uncertainty as Nvidia prepares to announce its fourth-quarter results after the market closes.
Nvidia’s stock has surged 212% over the past year, driven by strong sales and earnings fueled by growing AI demand. However, concerns are mounting among investors that the stock may have become overvalued. The outcome of Nvidia’s Q4 results is expected to have a significant impact on Super Micro Computer and other AI stocks, leading investors to tread cautiously in the sector to mitigate risk.
Following recent declines, Super Micro Computer’s stock is now down approximately 29% from its recent peak earlier this month. Despite this pullback, the stock remains a high-risk, high-reward investment.
Interestingly, despite bullish analyst coverage published on Tuesday, Supermicro’s stock price declined on Wednesday. Rosenblatt’s analysts raised their one-year price target from $700 to $1,300 per share, implying an 82.5% upside from the current price.
Rosenblatt’s analysts highlighted the expanding AI server market and anticipated market share gains for Supermicro as key drivers for the stock’s potential growth. They also noted Supermicro’s expertise in liquid-cooling technologies for servers as a potential performance enhancer.
