Super Micro dips as AI server maker looks to sell shares

(Reuters) -Super Micro Computer said on Tuesday it will sell 2 million shares that could fetch around $2 billion, sending the AI server maker’s shares 11% lower.

The San Jose-based company’s shares have more than tripled since January, making the sale of equity a lucrative option to raise funds.

However, buying the shares following their stellar rally could be risky for investors concerned Super Micro might fail to meet their increased expectations.

Super Micro’s ability to quickly develop AI-optimized servers and its in-house liquid cooling technology have helped the company turn into a key data center supplier.

The recent surge in Super Micro’s market value led to its inclusion in the S&P 500 index on Monday. That means exchange traded funds that track the index must now own Super Micro’s shares.

Following the drop in Super Micro’s stock on Tuesday’s share-sale announcement, the company could raise about $1.8 billion in the offer.

The company raised $1.7 billion last month in a convertible bond offering to fuel business expansion.

Proceeds from the latest offering will be used to purchase inventory, expand manufacturing capacity, increase research and development investments and other working capital purposes, the company said in a regulatory filing with the U.S. Securities and Exchange Commission on Tuesday.

The company’s outstanding shares will increase to 58.6 million after the offering, it said, adding that the underwriter, Goldman Sachs, has the option to buy up to 300,000 additional shares within 30 days.

(Reporting by Akash Sriram in Bengaluru Editing by Shinjini Ganguli, Noel Randewich and Devika Syamnath)