Meta to raise up to $95-billion in equity to fund costly AI expansion — SkimNews
Get the Tech newsletter
Daily tech — startups, AI labs, chips, the launches that shape the next decade. Free.
- Meta launched public offerings worth about US$35 billion in common and preferred stock and plans a separate at-the-market share-sale program worth up to US$60 billion, its largest-ever equity fundraising; timing and terms for the larger program have not been finalized.
- Meta reported US$2.12 billion in negative free cash flow in the third quarter, compared with US$10.63 billion a year earlier, while committing about US$825 billion in future spending primarily to data centres, AI infrastructure and cloud-computing power.
- Meta raised the lower end of its annual capital-expenditure forecast to US$135 billion to US$145 billion and reported US$82.45 billion in cash, cash equivalents and marketable securities against US$80.92 billion of long-term debt as of Sept. 30.
- Nvidia, Advanced Micro Devices and Broadcom expressed interest in buying Meta Class A shares totaling up to US$5 billion, which adds to concerns about chip suppliers helping finance a major customer's expansion.
- Meta shares fell about 1.4% in morning trading, while William Blair said investors are expected to continue questioning the financing and the potential for future capital raises.
- Meta plans to issue Class C common stock in January 2027, effectively creating a two-for-one split to fund acquisitions and retain top talent while maintaining Zuckerberg's control; it also agreed to let him sell shares to help pay a potential California billionaire wealth tax if he stays in the state.
- Alphabet increased its equity offerings to US$84.75 billion earlier this year, reinforcing the wider shift among large technology companies toward debt and equity funding for AI infrastructure after years of relying on cash.
Why it matters: Meta's US$135 billion-to-US$145 billion capital plan and US$2.12 billion quarterly cash burn shift the AI build-out burden onto equity holders as the US$95 billion raise replaces internal cash. Nvidia, AMD and Broadcom's interest in up to US$5 billion of Class A stock adds a circular wrinkle because they also supply Meta's chips.
Ask SkimNews
