SMCI Plunge: Super Micro Computer Stock Tanks 12% After $2B Convertible Notes Shock

Wall Street's AI darling just got a reality check. Super Micro Computer (SMCI) shares cratered after announcing a $2 billion convertible notes offering—because nothing says 'confidence' like diluting shareholders during a bull run.

The server specialist's stock dropped like a hot GPU as investors balked at the potential equity dilution. Convertible notes—Wall Street's favorite 'have your cake and eat it too' instrument—let companies raise cash now while punting the actual share price consequences down the road.

Market veterans saw this coming from miles away. When a stock rockets 300% in a year like SMCI did, management always finds creative ways to cash in. The only surprise? They waited this long to tap the ATM.

This is why crypto exists—no boardrooms deciding to print more Bitcoin on a Tuesday afternoon. The market's verdict? SMCI's 12% drop says it all.

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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.