Super Micro Computer (NASDAQ: SMCI) shares declined 5.3% to close at $29.22 on Tuesday, underperforming the broader market and its peers in the server and chip sectors. The sharp drop came as Jane Street Group disclosed an 8.5% passive stake in the company via a Schedule 13G filing, and investors continued to assess the potential dilution from a recently announced $7 billion equity-linked financing plan.
The financing package, which includes a mandatory convertible preferred stock offering and an at-the-market stock sale program, is designed to raise capital to fund component purchases for approximately $39 billion in advanced AI-server orders. However, the company has cautioned that these orders are not firm commitments and could be canceled or delayed, adding another layer of uncertainty for shareholders.
Jane Street and its affiliates reported owning 56.6 million shares of Super Micro, representing an 8.5% stake in the company's common stock. According to the Schedule 13G filing, which is used by large holders who are not seeking control, part of the stake includes shares that can be acquired from depositary shares linked to Super Micro's 7.00% Series A Mandatory Convertible Preferred Stock.
The mandatory convertible preferred stock, which pays a 7% annual dividend on a $1,000 liquidation preference, will eventually convert into common shares, potentially increasing the share count and diluting existing shareholders. The company priced the offering last week at $27.50 per share for 45,454,545 common shares and at $50 per share for 75 million depositary shares. The depositary-share sale closed on June 15, according to an 8-K filing with the Securities and Exchange Commission.
Trading volume was heavy, with approximately 54.2 million shares changing hands, as the stock price hovered near its intraday low of $29.11. The broader market also faced headwinds, with the Nasdaq Composite falling 1.15% and the S&P 500 declining 0.57%. The Philadelphia semiconductor index skidded 5.7%, and technology was the worst-performing sector in the S&P 500.
“We had a big move yesterday in the market,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. He noted that investors were “digesting some of those gains” ahead of the Federal Reserve’s policy update, which led to a loss of momentum for higher-risk AI infrastructure names.
Other companies in the AI-server space also experienced declines, though to a lesser extent. Dell Technologies slipped 1.2%, Hewlett Packard Enterprise dropped 1.3%, and Nvidia, a key supplier of AI chips for data centers, was off 2.4%. Super Micro's more pronounced decline reflects a shift in market focus, with the stock now trading more like a financing play than a pure AI growth story.
Super Micro has warned that the $39 billion in AI-server orders are not locked in and could be subject to cancellation or delays, as stated in its offering documents. The company faces multiple risks, including potential order slippage, margin compression, and further equity dilution, any of which could weigh on the stock even amid robust AI infrastructure spending.
