Episode summary
Super Micro Falls on $7 Billion Offering to Fund AI | Bloomberg Intelligence
Bloomberg Intelligence
· · 22 min · Hosts: Paul Sweeney, John Tucker · Guests: Woo Jin Ho, Caroline Hyde, Steve Man, Diana Rosero Pena
Summary
Super Micro Computer fell after announcing a $7 billion equity raise to help fund component purchases for roughly $39 billion in AI server orders. The analyst said the deal looks about 20% to 27% dilutive to shareholders, but argued the financing gives the company the cash it needs to buy GPUs and fulfill orders that are expected to mostly convert in fiscal 2027. He also said hardware margins are thin, yet even small gross-margin gains could make the setup positive over time if revenue scales.
The conversation then shifted to SpaceX’s planned IPO, which the host and guest described as highly unusual in both size and hype. The guest said pricing is expected around $135 a share, with up to $1.8 trillion of market valuation and $75 billion of new equity, and noted that about 30% of shares are being allocated to retail investors. Demand was described as enormous, with big fund managers and Middle Eastern investors seeking large allocations, though governance concerns around Elon Musk’s control and voting rights are drawing pushback from some pension funds and from Elizabeth Warren.
A separate analyst said a Tesla-SpaceX merger looks far away, because the real synergies are years off and Tesla’s main meaningful contribution today is battery storage. He said Tesla’s robotaxi rollout is behind expectations, though the company may still ramp later in the year. The episode closed on Chewy, where management’s cautious guidance and softer discretionary spending outlook pressured the stock, despite still-solid results.
Key takeaways
- The analyst said Super Micro’s $7 billion raise could be 20% to 27% dilutive, but it is meant to finance AI-server orders already in hand.
- Super Micro’s orders are tied to AI servers, and the analyst said most of the $39 billion demand is expected to hit in fiscal 2027.
- The guest said SpaceX’s IPO is expected to price at $135 a share with up to $75 billion of new equity and unusually heavy retail participation.
- Governance concerns around Elon Musk’s control are a live issue, with pension funds and Elizabeth Warren pressing the SEC over voting rights and retail risk.
- The Tesla analyst said a Tesla-SpaceX merger is not near-term, because current synergies are limited and Tesla’s battery business is the main meaningful overlap today.
- Chewy cut revenue guidance as consumers stay cautious on discretionary pet spending, even though the company’s core business remains steady.
Notable quotes
“the math quite frankly tells me at face value uh what we wrote was uh 20% plus uh dilutive to shareholders”
“$7 billion in equity financing. Uh and uh you you try to back that with the $39 billion in orders”
“We understand of course it's going to be raising up to $1.8 trillion of market valuation and $75 billion of new equity”
“they lower uh revenue guidance and that was pretty much because they don't necessarily expect a lot of discretionary spending going forward”
How the episode opens
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One of the stories that we've been talking about today, Super Micro computer. Here's a company started the day with like 25 billion of market cap and they announced a $7 billion equity raise. Kids, I don't know how you do the math, but that's dilutive.
I don't know by how much, but and the stock's down 17 18% today. I you just don't see that very often. Wuho joins us here, senior technology analyst for Bloomberg Intelligence.
Woo, I've been doing this Wall Street thing a long time. That's a monster followon equity offering given the market cap size. What's the math tell you?
Um the math quite frankly tells me at face value uh what we wrote was uh 20% plus uh dilutive to shareholders. Uh I think there's um another seller who said it's up to 27% uh dilutive to shareholders. So yeah uh investors aren't happy about it but but quite frankly um like Christina said earlier on a on a recap uh short-term pain may lead to long-term gain.
Okay. what they're going to use the money for for what and when does it pay off? Two big questions here. — Yeah. Hey, hey, Charlie. So, so that's — Oh, hey, John. Sorry about that. — Call me anything you want. — Uh so, um really really straightforward. Look, $7 billion in equity financing. Uh and uh you you try to back that with the $39 billion in orders. Most of those orders are coming in fiscal 2027, which is starts in uh July.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai server capex
- super micro equity offering
- spacex ipo
- tesla spacex merger speculation
- chewy earnings guidance
Companies and tickers mentioned
- SMCI
- TSLA
- CHWY
- Super Micro Computer
- SpaceX
- Tesla
- Chewy
Watch the episode
Watch “Super Micro Falls on $7 Billion Offering to Fund AI | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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