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

Super Micro Computer (SMCI) announced a $7 billion equity and equity-linked financing package on June 9, 2026, to fund its booming AI server orders. The company reported $39 billion in new AI server orders in recent weeks but saw its stock tumble 7% in after-hours trading following the news. The financing includes $1.25 billion in new shares, $3.75 billion in depositary shares tied to convertible preferred stock, and an at-the-market program to sell up to $2 billion in common stock starting in Q3 2026. The equity raise aims to address Super Micro’s cash burn, which reached $6.8 billion in negative free cash flow over the 12 months ending March 2026. The company’s capital-intensive business model, driven by AI demand, requires significant funding to purchase components for its advanced servers. Analysts noted the move mirrors recent equity offerings by Big Tech firms like Alphabet and Meta, which are also raising capital to support AI investments. While the $39 billion in orders signals strong demand, investors reacted negatively to the dilution of existing shares. Super Micro’s gross margins have fluctuated, compressing to 6.3% in February before rising to 9.9% in May. Management guided for margins of 8.2% to 8.4% in the current quarter, though sustainability remains uncertain. The company also faces lingering challenges from a March incident where its co-founder and two others were charged with conspiring to smuggle $2.5 billion worth of Nvidia chips to China. Despite these issues, Super Micro’s AI server backlog continues to grow, positioning it as a key player in the artificial intelligence hardware market.