Super Micro Computer (SMCI) announced on June 10 that it plans to raise about $7 billion through equity and equity-related financing, including $5 billion via common stock and preferred stock issuance and $2 billion through a market offering. The stock closed down by $29.27 on the day. Management confirmed that the proceeds will be used to purchase components to fulfill its AI server orders of about $39 billion for fiscal year 2027.
$7 billion financing structure: a detailed split of two instruments
SMCI’s announced financing plan is divided into the following two parts:
$5 billion: raised through issuance of common stock and preferred stock
$2 billion: raised through an at-the-market (ATM) offering
In the announcement, management confirmed that all funds will be used to purchase key AI server components to fulfill recent orders. This is one of the largest equity financings in the AI hardware sector.
$39 billion in orders: confirmed by 20 customers, planned for delivery in FY2027
SMCI’s official press release confirmed that over the past few weeks it has received advanced AI server orders from more than 20 companies, totaling about $39 billion. Management confirmed that the above orders are planned for completion and delivery in fiscal year 2027. According to the announcement, the sources of demand include Nvidia GPU deployments, hyperscale cloud infrastructure, sovereign AI initiatives, enterprise AI factories, and large language model training clusters.
Analyst consensus estimates and current valuation data
Based on Wall Street analyst consensus from institutions such as Bloomberg:
Fiscal year outlook:
FY total revenue consensus estimate: $39.67 billion, up 80.6% year over year
FY earnings per share (EPS) consensus estimate: $2.56, up 24.3% year over year
Next quarter (Q1 FY2027) revenue consensus estimate: about $11.7 billion, up about 103% year over year
Current valuation metrics (as of June 11):
Expected forward P/E: 15.9x
Price/Earnings to Growth (PEG) ratio: 0.56
The valuation discount reflects, in part, the market’s ongoing cautiousness regarding SMCI’s 2024 accounting controversy, which had previously brought the company close to delisting.
FAQ
Why did SMCI’s $7 billion financing cause a sharp drop in its stock price?
The key focus for investors is the dilution effect of the share issuance on earnings per share. The size of this financing ($7 billion, including $5 billion of stock issuance and $2 billion of market offerings) is a significant proportion relative to the company’s market capitalization. The market characterized it as a large-scale dilution event, triggering selling pressure on the day.
Have the $39 billion AI orders been officially confirmed by customers?
According to SMCI’s official press release, management confirmed that over the past few weeks it received the above orders from more than 20 companies, but did not disclose each customer’s name individually. These orders are planned to be fulfilled in fiscal year 2027, with the specific timeline depending on component procurement progress.
Does SMCI’s low valuation reflect long-term risk?
The current valuation (forward P/E of 15.9x and PEG of 0.56) is low relative to its 80.6% year-over-year revenue growth rate. Analysts’ consensus believes that the discount partly reflects the lingering tail risk from the 2024 accounting controversy and dilution concerns, rather than doubts about the demand for the orders themselves.
