Meta Plans to Raise Up to $95 Billion in Stock to Pay for AI Data Centers and Computing
Meta said Monday it will launch about $35 billion in stock offerings now and plans a separate $60 billion share sale program, its largest equity fundraising, as its capital spending for the year is set at $135 billion to $145 billion.
Meta Platforms said on Monday it plans to raise up to $95 billion in its largest-ever equity fundraising, as the company spends heavily on data centers, chips and other computing capacity for artificial intelligence.
The plan starts with public offerings worth about $35 billion in common and preferred stock, according to Reuters. That first part is made up of $22.5 billion of Class A common stock and $12.5 billion of depositary shares representing mandatory convertible preferred stock, according to Dow Jones Newswires via Morningstar.
Meta also plans a separate at-the-market share sale program worth up to $60 billion, which would let it sell shares gradually over time. That program would come after its new non-voting Class C shares begin trading, which is expected in the first quarter of 2027, but Meta said it has not yet finalized the timing and terms of the sale. Meta said it would issue Class C common stock in January 2027, effectively resulting in a two-for-one split, to fund acquisitions and retain staff while maintaining Chief Executive Mark Zuckerberg’s control.
Cash flow turned negative in the third quarter
Meta reported a $2.12 billion cash burn in the third quarter, its first negative free cash flow in over a decade, compared with positive cash flow of $10.63 billion a year earlier, according to Reuters. Meta has committed to spend about $825 billion in the future, primarily on data centers, artificial intelligence infrastructure and cloud computing power. The company had cash, cash equivalents and marketable securities of $82.45 billion and long-term debt of $80.92 billion as of September 30, according to its latest quarterly filing.
The fundraising plan has drawn interest of up to $5 billion in total from Nvidia, Advanced Micro Devices and Broadcom for Class A shares, according to Reuters. That interest adds to concern about a circular flow of capital in the artificial intelligence industry, as chip suppliers help finance the expansion of one of their biggest customers. William Blair analysts said in a note, “We expect investors to continue to question the financing and potential for future capital raises.”
Shares fell as peers also raised equity
Meta’s shares fell about 1.4% in morning trading on Monday, according to Reuters. Earlier this year, Alphabet increased the size of its equity offerings to $84.75 billion, a sign that large technology companies are turning to stock sales and debt markets to pay for artificial intelligence infrastructure after years of relying mainly on cash.
Meta raised the lower end of its annual capital expenditure forecast last week to a range of $135 billion to $145 billion. William Blair analysts said, “We believe that Meta will ultimately produce a profitable AI business and its returns longer-term should help the company diversify, although the path may not be linear.”
Reporting based on coverage by Reuters and Dow Jones Newswires via Morningstar.
