Meta to raise up to $95 billion in equity to fund costly AI expansion

Meta to Raise $95 Billion in Equity for Costly AI and Infrastructure Expansion

Meta’s Ambitious Funding Plans and Financial Overview

Equity Offerings and Share Sale Programs

Oct 26 (Reuters) - Meta Platforms said on Monday it plans to raise up to $95 billion in equity to fund its costly AI-related expansion of data centers, cloud computing power and other infrastructure.

The company launched public offerings of about $35 billion in common stock and convertible preferred stock. It also said it plans to launch a separate at-the-market share sale program of up to $60 billion after its new non-voting Class C shares begin trading, which is expected in the first quarter of 2027.

AI Investments and Competitive Landscape

Meta has stepped up spending on data centers, computing capacity and AI products to compete with rival AI heavyweights OpenAI and Anthropic.

Current Financial Position

The social media company had cash, cash equivalents and marketable securities of $82.45 billion, slightly exceeding its long-term debt of $80.92 billion as of September 30, according to its quarterly filing from last week.

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

Investor Interest and Capital Expenditure Forecast

Meta said chip companies Nvidia, Advanced Micro Devices and Broadcom have expressed interest in purchasing up to $5 billion of Meta's Class A common stock in the offering.

Last week, Meta raised the lower end of its annual spending forecast, now expecting capital expenditure to be between $135 billion and $145 billion this year, up from $130 billion to $145 billion expected previously.

Cash Flow and Revenue Performance

Meta reported a $2.12 billion cash burn in the third quarter, marking its first negative free cash flow in over ten years, compared with a positive cash flow of $10.63 billion a year ago.

The company reported third-quarter revenue of $64.60 billion, ahead of Wall Street estimates of $63.37 billion. It also projected fourth-quarter revenue between $73 billion and $76 billion.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Leroy Leo)