Super Micro Computer (SMCI) Stock Plummets 28% on $7B Capital Raise

Key Takeaways

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Super Micro Computer shares plummeted nearly 28% Wednesday following disclosure of a capital raise potentially totaling $7 billion
The firm is offering 45.45 million common shares priced at $27.50 alongside 75 million depositary shares at $50 apiece
Capital raised will support component purchases for approximately $39 billion worth of AI server contracts from more than 20 clients
Wolfe Research launched coverage with a Peer Perform rating, highlighting legal uncertainties tied to co-founder Wally Liaw’s indictment
Shares recovered 1.37% in Thursday’s premarket session to $29.67; analyst consensus stands at Hold with a $32.70 average price target

Super Micro Computer experienced a brutal selloff Wednesday, shedding nearly 28% after revealing a capital-raising initiative that could bring in as much as $7 billion. While the stock recovered slightly in Thursday’s premarket trading—rising 1.37% to $29.67—the previous session’s collapse left investors shaken.

Super Micro Computer, Inc., SMCI

The capital raise involves two simultaneous offerings. The company plans to issue 45.45 million shares of common stock at a price of $27.50 per share, while also selling 75 million depositary shares at $50 each. The depositary shares are connected to newly created 7.0% mandatory convertible preferred stock.

Management expects net proceeds of approximately $1.22 billion from the common equity sale and roughly $3.68 billion from the preferred-linked transaction. When combined with an active $1.25 billion at-the-market equity program, the total capital available could reach about $7 billion.

Super Micro disclosed that proceeds will primarily fund component acquisitions necessary to complete around $39 billion in artificial intelligence server orders from over 20 different customers. Additional funds will be allocated toward debt reduction, working capital needs, and capital investments.

The disclosure triggered panic among shareholders who were already uneasy about the company’s prospects. The Defiance Daily Target 2X Short SMCI ETF jumped approximately 40% Wednesday as short-sellers capitalized on the downturn.

Wolfe Research Launches Coverage With Reservations

Thursday brought additional scrutiny as Wolfe Research initiated coverage on SMCI with a Peer Perform rating, citing legal and compliance uncertainties stemming from co-founder Wally Liaw’s criminal indictment. The firm established a fair value range of $26 to $31 per share, representing 9 to 11 times projected 2028 earnings.

Wolfe’s financial model projects 2028 revenue reaching $68.2 billion with earnings per share of $2.90. The research team identified potential risk factors including the possibility of auditor BDO USA stepping down or additional executive departures. No other company leaders have been implicated in the indictment, and Super Micro maintains its NVIDIA partnership remains strong.

While customer demand appears robust—with the analyst noting backlog levels at all-time highs—Wolfe concluded the risk environment is too murky to justify a more optimistic valuation stance currently.

According to InvestingPro’s valuation model, fair value stands at $40.03, implying significant upside from current levels. The stock has declined 37.6% in just the past week.

Charts Show Continued Weakness

From a technical standpoint, SMCI is trading beneath all key moving averages. The stock currently sits 23.4% below its 20-day moving average, 7.6% under the 50-day, 5% beneath the 100-day, and 18% below the 200-day moving average. Over the trailing twelve months, shares have dropped 32.3%.

A death cross pattern emerged in December 2025 and remains active. The MACD indicator is positioned below its signal line with a negative histogram reading—an unfavorable configuration for those with bullish positions.

Chart watchers are monitoring resistance in the $30 zone and support near the $29.50 level.

Mizuho Securities maintains a Neutral stance and lifted its price objective to $44 on June 1. The Street’s overall consensus rating is Hold with an average twelve-month target of $32.70.

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