The deal will consist of $5 billion in underwritten offerings and $2 billion in an at-the-market program, which would involve Super Micro selling shares directly into the open market from time to time beginning “no earlier” than the third quarter, the company said Tuesday in a statement.
Sales of Super Micro’s servers fitted with Nvidia Corp. chips have surged, fueled by demand for AI services. The company said it had about $39 billion in orders and would use the proceeds from the equity offerings in part to pay for the equipment needed to make the servers. Super Micro said it also may use a portion of the proceeds for general corporate purposes such as repaying debt and capital expenditures.
The shares dropped as much as 19% to $33.12 on Wednesday in New York, reflecting concern about the deal’s earnings dilution. The stock had been up 39% this year through Tuesday’s close.
The underwritten offerings, which consist of a $1.25 billion share sale and a $3.75 billion offering of depositary shares with underlying mandatory convertible preferred stock, are expected to price Wednesday evening New York time, according to terms of the deal seen by Bloomberg News.
The financing plan will dilute near-term earnings, “but it also signals AI demand that could lift fiscal 2027 revenue above the $50 billion consensus,” Woo Jin Ho, an analyst at Bloomberg Intelligence, wrote in a note. “The capital will help fund components and capex for large AI deployments, though the dilution could exceed 20%, depending on final terms and at-the-market usage.”
Super Micro has faced intense competition in the AI server market from vendors such as Dell Technologies Inc. and Hewlett Packard Enterprise Co. Last month, the company reported revenue that fell short of analysts’ estimates and attributed the miss to a “short-term delay” because customers weren’t ready for Super Micro’s equipment.
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Also, US prosecutors in March charged company co-founder Yih-Shyan “Wally” Liaw with illegally diverting billions of dollars in Nvidia-powered servers to China, in violation of US export controls. The company wasn’t named in the indictment. Earlier Tuesday, Super Micro in a filing updated its risk factor disclosures to include the indictment and resulting “negative publicity.”
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc. are leading the offerings, the statement shows.
