What happened: Supermicro Computer (SMCI) stock tumbled as much as 13% at the open on Wednesday.
What’s behind the move: The AI server maker announced plans to raise approximately $7 billion through a combination of equity and equity-linked financing.
Supermicro said the capital will be used to purchase components to fulfill roughly $39 billion in AI server orders it received in recent weeks.
The move highlights the strong demand for AI-related hardware but also raises concerns about shareholder dilution.
Shares of Supermicro extended declines from Tuesday, when the stock dropped 12%. Year to date, the stock is up 38% amid a boom in AI server demand.
What else you need to know: Supermicro joins a growing list of companies raising cash in the public market in order to expand AI-related initiatives.
Alphabet (GOOG, GOOGL) recently announced an $80 billion equity capital raise, which was later upsized to $84.75 billion. The company plans to use the money to expand its AI infrastructure and global compute capabilities.
The capital raise comes ahead of major AI-related IPOs, including SpaceX (SPAX.PVT), Anthropic (ANTH.PVT), and OpenAI (OPAI.PVT).
