Super Micro stock plunges as $7 billion equity raise overshadows booming backlog

By Christine Ji

Super Micro looks to raise equity as it faces staggering AI demand but also an intense cash burn

Super Micro announced $39 billion of new AI server orders in recent weeks.

Super Micro Computer announced a $7 billion equity and equity-linked financing package on Tuesday, sending shares tumbling 7% in after-hours trading as investors reacted to the rising cost of the artificial-intelligence boom.

The offerings will be part of Super Micro's (SMCI) plan "to fund the purchase of components to satisfy the AI orders that the company has received in recent weeks for its advanced AI servers," according to a statement. The company, which designs and builds server and storage systems, said it has received $39 billion in orders for its AI servers in the past few weeks.

Super Micro plans to issue $1.25 billion in new shares and $3.75 billion of depositary shares, which represent fractional interests in the company's newly-issued convertible preferred stock. The company also plans to utilize an at-the-market program to sell up to $2 billion of its common stock into the market starting the third quarter of 2026.

Read: Super Micro's stock surges as Wall Street cheers its margin recovery

While $39 billion in orders is a positive signal for Super Micro's business, Wall Street was spooked by the equity financing plans, which will dilute existing shareholders.

Super Micro has racked up $6.8 billion in negative free cash flow for the 12 months trailing March 2026 due to the capital-intensive nature of its business and the AI boom. As a result, it needs to raise equity for a fresh source of funding.

The company appears to following in the footsteps of Big Tech giants like Alphabet (GOOGL) (GOOG) and Meta Platforms (META). Last week, Alphabet announced a $80 billion equity offering, and Meta is also reportedly contemplating a similar move.

See more: First Google, now Meta? Big Tech may increasingly sell stock to bankroll $820 billion AI boom.

Investors are wondering if Super Micro's orders can trickle down into earnings growth. The company's margin profile has been under scrutiny after gross margins compressed to 6.3% in February. Although the recent May earnings report showed signs of recovery, with margins rising to 9.9%, it's unclear if those levels are sustainable going forward. On the May earnings call, management guided for margins between 8.2% to 8.4% for the current quarter.

Super Micro is also dealing with a lingering overhang from March, when the company's co-founder and two other individuals were charged with conspiring to smuggle $2.5 billion of Nvidia (NVDA) chips to China.

-Christine Ji

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-09-26 2012ET