Meta eyes record $97.5 billion equity raise to fund AI infrastructure push

Meta Platforms said on Tuesday it increased its largest-ever equity fundraising to $97.5 billion as the social media giant aggressively expands its AI infrastructure.

 

The social media giant said it was increasing the common stock offering it announced on Monday from $22.5 billion to $25 billion, priced at $625.00 per share.

 

Meta also priced its 250 million depositary shares at $50 per share.

 

The Facebook parent has launched public offerings ‌worth about $35 billion in common and preferred stock, and said it also plans to ​launch a separate at-the-market share sale program, under which a ​company sells shares gradually at prevailing market prices, worth up to $60 billion.

 

 

The company will launch the larger share sale program after its new non-voting Class ​C shares begin trading, expected in the first quarter of 2027, but it has not yet finalized the sale's timing and terms.

 

Meta's fundraising plan, among the biggest by an AI company, has also drawn interest of up to $5 billion in total from Nvidia , Advanced Micro Devices and Broadcom for Class A shares.

 

In a separate statement, Nvidia said it would invest $3 billion in Meta's equity offering.

 

Their funding interest adds to concerns about an increasingly circular flow of capital in the AI ​industry, as chip suppliers help finance the expansion of one of their biggest customers. Meta has been pouring money into chips and data centers to compete better with OpenAI and ‌Anthropic.

 

"We expect investors to continue to question the financing and potential for future capital raises," William Blair analysts said in a note.  

"Overall, we believe ​the financing reinforces both Meta's confidence in the long-term returns from AI investment and the increasingly capital-intensive nature of pursuing that opportunity."

 

The company's shares fell about 1.4% in morning trading.

 

The latest fundraising further underscores a shift among big technology companies increasingly tapping debt markets and raising equity to bolster their AI infrastructure, after previously relying on cash to fund their investments.

 

In ‌June, Google's parent company Alphabet increased its equity offerings to $84.75 billion.

 

Separately ​on Monday, SpaceX said an affiliate of Apollo Global Management will buy ‌AI chips and server hardware and lease them to the rockets-to-AI firm, in a deal with total principal payments of about $40 billion.  

META'S AI SPENDING IS BURNING ‌CASH

 

Meta has committed to spending about $825 billion in the future, driven primarily by growing investments in data centers, AI-related infrastructure, and cloud computing power.

 

But the aggressive ​expansion has eroded its historically strong free cash flow.

 

The company reported a $2.12 billion cash burn in the third quarter, its first negative free cash flow in over a decade, compared with a positive cash flow of $10.63 billion a year ago.

 

Still, ​the early popularity of its consumer-focused AI agent Muse and release of a competitive new series of AI models have helped partly justify Meta's aggressive investments.

 

"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," William Blair analysts said.

 

The company had $82.45 billion in cash, cash equivalents, and marketable securities and $80.92 billion in long-term debt as of ‌September 30, according to its latest quarterly filing.

 

Last week, Meta raised the lower end of its annual capital expenditure forecast to $135 billion to $145 billion.

 

The company said it would issue Class C common stock in January 2027, effectively creating a two-for-one split, to fund acquisitions and retain top talent while maintaining CEO Mark Zuckerberg's control.

 

Meta agreed to grant Zuckerberg Class C shares he can sell to help pay a potential California billionaire wealth tax, in exchange for his commitment to remain in California.