Super Micro Computer (NASDAQ:SMCI), Inc. has doubled down on AI-driven growth. The server company plans to sell a loan worth $2 billion via convertible senior notes to institutional investors. In addition to the $2 billion borrowing plan, which is due June 15th, 2030, Supermicro placed an option for an extra $300 million if there is demand.
Being an unsecured senior debt, Supermicro’s borrowing is not backed up, but investors are repaid before all other debt obligations. In short, based on the promise of AI growth, Supermicro is raising cash for the immediate expansion of server operations, while large investors may convert the loan later into SMCI stock.
If the funding is successful, together with the extra $300 million option, this would indicate that committed investors expect SMCI stock to rise significantly. However, because the conversion into stock can dilute the value of existing shares.
It is now a question of whether Supermicro can offset potential dilution of shares with significant server output to AI data centers.
Supermicro’s Positioning In the AI Landscape
In mid-May, we extensively covered Supermicro’s momentum in the global server market, noting that this sector grew by 73.5% in 2024, leaving investors with a compound annual growth rate (CAGR) of 16.3% through 2029.
Supermicro is ranked among the top server players, sandwiched between Dell Technologies (NYSE:DELL) and Hewlett Packard, according to the International Data Corporation (IDC).
After President Trump visited Saudi Arabia, together with the leading tech/AI/defense companies, it became even more apparent that Supermicro’s role in the AI data center business is aligned for strategic partnerships. Namely, Saudi’s DataVault, the Kingdom’s largest data center company, selected Supermicro for a $20 billion deal to fill up planned AI factories.
Supermicro’s Role in Global AI Deployment
As we noted back in mid-May, under the umbrella of $600 billion worth of commitments lies the greater push to secure US hegemony. The present Iran-Israel war is also a part of that plan, by which the US would secure the Middle East choke point for global trade via the Strait of Hormuz.
Likewise, this would further plunge Europe into a vassal relationship with the US, even more so than just the bombing of Europe’s Nord Stream pipelines for cheap Russian gas.
In a 2009 paper titled Which Path to Persia?, The Brookings Institution detailed the plan to topple Iran, which is now playing in real-time. At this stage, the paper suggested that “it would be best to wait for an Iranian provocation” in order to expand operations.
It is quite significant that nearly the entire US political class is aligned with this paper, regardless of parties, domestic sentiment or expenditure of political capital. This suggests it is likely Iran’s “regime” will be toppled. And if that is the case, it is likely that Supermicro will get to serve Iran’s large underserved data center market.
And if regional threats subside, it is also likely that other gulf states like Saudi Arabia and UAE will double down on AI data centers to secure stability. As we’ve maintained all along related to Larry Ellison and Tony Blair Institute for Global Change (TBI), the primary purpose of AI is to implement a governance layer by which behavior is shaped and surveilled on a granular, automated level.
With or without a toppled Iran, this AI-driven governance layer would be needed, benefiting companies like Supermicro.
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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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