Supermicro Computer stock fell by 18% on Wednesday after it announced plans to raise $7 billion to complete AI server orders.
Supermicro said the capital, which will be raised through a combination of equity and equity-linked financing, will be used to purchase components to fulfill roughly $39 billion in AI server orders it received in recent weeks.
The fear is that component prices are increasing, and server suppliers like Supermicro won’t be able to pass those higher costs to customers. The result will be lower gross margins. The stock offering will also dilute existing shareholders.
Shares of Supermicro extended declines from Tuesday, when the stock dropped 12%. Year to date, the stock is still up 14% amid a boom in AI server demand.
Supermicro Computer stock fell by 18% on Wednesday after it announced plans to raise $7 billion to complete AI server orders.
Supermicro said the capital, which will be raised through a combination of equity and equity-linked financing, will be used to purchase components to fulfill roughly $39 billion in AI server orders it received in recent weeks.
The fear is that component prices are increasing, and server suppliers like Supermicro won’t be able to pass those higher costs to customers. The result will be lower gross margins. The stock offering will also dilute existing shareholders.
Shares of Supermicro extended declines from Tuesday, when the stock dropped 12%. Year to date, the stock is still up 14% amid a boom in AI server demand.