Meta
Meta plans a $95 billion stock sale to fund its AI buildout
Meta plans to raise up to $95 billion in equity, its largest ever, as free cash flow turned negative and Nvidia, AMD and Broadcom expressed interest.
Meta plans to raise up to $95 billion in stock, the largest equity fundraising in its history, to pay for AI infrastructure.
The company announced the plan Oct. 26, 2026, Reuters reported.
The Offering
Meta launched public offerings worth about $35 billion in common and preferred stock, Reuters and The Financial Times reported Oct. 26. It also plans a separate at-the-market share sale program of up to $60 billion. That program starts after Meta’s new non-voting Class C shares begin trading, expected in the first quarter of 2027, Reuters reported. Timing and terms are not final. Reuters also reported that Alphabet increased its equity offerings to $84.75 billion earlier this year.
Nvidia, AMD and Broadcom expressed interest in up to $5 billion total of Class A shares. The FT called the three chipmakers cornerstone investors. Reuters said the interest adds to concerns about a circular flow of capital, with chip suppliers helping finance one of their biggest customers.
The Cash Burn
Meta burned $2.12 billion in free cash in the third quarter, its first negative free cash flow in over a decade, Reuters reported. A year earlier it generated $10.63 billion. It has committed to spend about $825 billion in the future, mostly on data centers, AI infrastructure and cloud computing power.
Meta reported third-quarter sales up 26% last week and raised the low end of its 2026 capital spending forecast to $135 billion to $145 billion, the FT reported. It also warned it would need to raise “hundreds of billions of dollars” over several years for AI. Its shares fell 7% on Thursday.
The Company Response
“AI is creating significant opportunities for Meta across its core business and new products and services,” Meta said, according to the FT. “Meta’s AI investments are already generating tangible returns through increased engagement, improved advertising performance and increased monetisation.”
William Blair analysts said investors will keep questioning the financing. “We expect investors to continue to question the financing and potential for future capital raises,” they wrote in a note, Reuters reported.
The Control Question
Meta has said it would issue Class C common stock in January 2027, effectively a two-for-one split, to fund acquisitions and retain talent while keeping Mark Zuckerberg’s control, Reuters reported. Meta agreed to grant Zuckerberg Class C shares he can sell to help pay a potential California billionaire wealth tax, in exchange for a commitment to keep him in California.
Analysis
Free cash flow is the money left after a company pays its operating costs and its investments. Meta’s free cash flow turned negative in the third quarter, yet its 2026 capital spending forecast is $135 billion to $145 billion. We think the equity raise follows from that gap. Meta is paying for the buildout with new shares. Nvidia, AMD and Broadcom sell to Meta. They would also own part of it. Reuters reported Meta is spending to compete with OpenAI and Anthropic. Public shareholders now carry that cost. They will keep paying it only if the AI investments return what Meta says they already do.