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(Sharecast News) - Super Micro Computer shares fell sharply in extended trading late on Tuesday after the AI server maker announced plans to raise $7bn in equity-related financing, overshadowing a surge in recent orders for its artificial intelligence systems.
The company said it intended to raise $5bn through underwritten offerings and a further $2bn through an at-the-market programme expected to begin no earlier than the third quarter.
The underwritten offerings include a $1.25bn common stock sale and $3.75bn of depositary shares representing interests in newly issued mandatory convertible preferred stock.
Super Micro said the proceeds would be used to help fund purchases of components needed to fulfil AI server orders received in recent weeks.
It said it had received about $39bn of AI server orders from more than 20 customers, reflecting continued strong demand for systems fitted with Nvidia chips.
The financing package will be led by JPMorgan, Goldman Sachs and Citigroup.
The underwritten offerings are expected to price on Wednesday evening in New York, according to terms cited by Bloomberg.
Shares in Super Micro fell about 9% in after-hours trading, with investors reacting to the prospect of dilution from the planned equity sales.
MarketWatch reported a decline of around 7%, saying the raise highlighted the intense cash demands of the AI infrastructure boom despite the company's large order book.
Super Micro has become one of the main beneficiaries of the surge in AI server demand, with revenue in the March quarter more than doubling from a year earlier.
However, the business remains capital intensive and the company has generated $6.8bn of negative free cash flow over the 12 months to March 2026, according to MarketWatch.
The company has also faced pressure on margins as costs for key components have risen.
Chief executive Charles Liang told analysts in May that memory costs had more than tripled in recent months.
MarketWatch said investors remained focused on whether Super Micro's order growth could translate into earnings, after gross margins fell to 6.3% in February before recovering to 9.9% in the May results.
Management guided for margins of 8.2% to 8.4% in the current quarter.
The financing plan places Super Micro among a growing number of companies tied to the AI boom that are turning to capital markets to fund expansion.
CNBC noted that Alphabet recently announced plans to sell $85bn of stock, including a $10bn investment from Berkshire Hathaway, as it ramps up AI infrastructure spending.
MarketWatch said Meta was also reportedly considering a similar move.
Super Micro also continues to face a legal and reputational overhang.
In March, US prosecutors charged company co-founder Yih-Shyan 'Wally' Liaw and two others with conspiring to smuggle $2.5bn of Nvidia-powered servers to China in violation of export controls.
Bloomberg said Super Micro was not named in the indictment, but the company updated its risk disclosures on Tuesday to include the indictment and resulting "negative publicity".
At 0725 EDT (1225 BST), shares in Super Micro Computer were down 11.66% in premarket trading in New York at $35.90.
Reporting by Josh White for Sharecast.com.