Super Micro to raise $7B; shares tumble on dilution fears

Super Micro Computer shares dropped 11.4% in premarket trading after the company announced plans to raise $7 billion through a mix of underwritten offerings and an at-the-market program to fund component purchases for AI server orders.

The financing includes $5 billion of underwritten offerings and $2 billion through an at-the-market (ATM) program expected to start no earlier than the third quarter. The underwritten portion comprises a $1.25 billion common stock sale and $3.75 billion of depositary shares tied to newly issued mandatory convertible preferred stock.

The company said the proceeds will be used to purchase components needed to fulfill roughly $39 billion in AI server orders placed by more than 20 customers. The orders primarily cover systems equipped with Nvidia chips.

Investors reacted to the announcement on concerns about shareholder dilution. The stock traded around $36 in premarket activity after falling 7.6% the previous day. Broader market indicators were softer, with S&P 500 futures down about 0.4%, and rival server maker Dell Technologies trading lower in premarket trade.

Super Micro reported revenue in the March quarter that more than doubled year over year as demand for AI servers accelerated. Over the 12 months ended March 2026, the company recorded negative free cash flow of $6.8 billion, reflecting large upfront spending on components and manufacturing capacity before corresponding revenue is recognized.

The company has cited rising input costs as an added pressure on working capital. Chief executive Charles Liang told analysts in May that memory costs had “more than tripled” in recent months, increasing the expense of assembling the ordered servers.

Company executives said the new capital will cover inventory and component purchases needed to fill the backlog and support customer deployments. Market participants will watch the timing of the ATM program and the terms of the mandatory convertible preferred securities, which will determine the pace of dilution and the effect on the balance sheet.

Despite the sell-off after the fundraising announcement, Super Micro shares remain up about 31% year to date.