The San Jose, California-based Super Micro Computer on Tuesday disclosed its plans to sell 2 million shares for a possible $2 billion, lowering the AI server maker's shares by 12%.
The company's shares' extraordinary climb, which has seen them more than triple since January, prompted the decision to explore an equity sale as a method of raising funds, according to Reuters. A significant participant in the AI-driven market rise, Nvidia's share value has not increased as much as this one due to the rising need for servers for AI data centers.
In addition to its unique liquid cooling technology, Super Micro's quick development of servers required for generative AI applications has solidified its position as a major supplier in the market. The recent inclusion of Super Micro in the S&P 500 index led to significant growth in its investor base.
However, the company's shares fell 16% over three trading days, and at $1,000.68, the Super Micro Computer stock sale may net $2 billion, though the issue price is yet unknown.
Through the successful sale of convertible bonds last month, Super Micro was able to raise $1.73 billion to fund its development plans.
The latest offering will fund R&D, manufacturing capacity development, inventory purchase, and other working capital needs, according to an SEC filing. The deal will leave 58.6 million shares outstanding, with Goldman Sachs with the option to purchase 300,000 more within 30 days.
(Photo : SMCI/Wikimedia Commons)
Supermicro Green Computing Park, San Jose, California, USA.
AI Boom Drives Super Micro Computer's Growth
Recent developments in AI caused increased demand for more processing power and data storage, especially with the introduction of large language models. Thus, investors are increasingly favoring chipmakers like Nvidia and server infrastructure companies like Super Micro Computer, expecting them to benefit from this development, as repoted by CNBC.
Super Micro Computer is growing swiftly, although it remains smaller than other IT giants whose stock has risen due to the AI boom. Its fourth-quarter net sales were $3.66 billion, up 100% year over year, and its net income was $300 million.
Despite Super Micro Computer's expansion, it has sold shares recently as per reports. CEO Charles Liang blamed his spouse in January for the sale of around 1,000 shares. Comparably, since the year's beginning, Director Daniel Fairfax has sold 900 shares on three separate days.
VerityData and filings suggest that these transactions were part of official stock sale plans; however, some sales, including Director Sherman Tuan's disposal of 5,000 shares, did not seem to be.
Shiu Leung Chan's Resignation's Impact
Shiu Leung Chan resigned from the company's board of directors on March 11, although on February 1, he showed his support for the firm by buying 2,000 shares. Super Micro Computer confirmed that Chan's departure was due to family business ventures rather than any problems with the corporation.
Despite Shiu Leung Chan's departure from the company, investors remained focused on the firm's financial and market performance. Super Micro Computer's market valuation is 63.21 billion USD, indicating its IT sector dominance, according to Investing.com.
