Meta Announces $35 Billion Stock Offering to Fund AI Infrastructure Expansion

Meta shares fell about 2% on Monday after the company launched a $35 billion stock offering to finance its AI expansion. The move follows a sharp increase in infrastructure spending, with the company now considering additional financing through 2027.

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Meta’s rising AI spending puts pressure on cash flow

Meta estimates capital expenses to reach $135 billion to $145 billion this year as it adds more computing power. The company recently increased that low end estimate to $130 billion and it again raised questions about its spending.

The investment comprises new data centers and four computing clusters, each with over one gigawatt of capacity. Meta plans to see its general infrastructure capacity nearly double this year as demand for AI services continues to increase.

The company has been expanding those services beyond social media, including the launch of its Muse Wonder AI models. These products require more computing power, adding to the costs of developing and operating Meta’s AI systems.

While revenue grew 26% in the third quarter to $64.6 billion, increased investment in infrastructure remained a drag on cash generation. Meta’s latest financing plans are closely tied to its future investment needs, as it reported negative free cash flow of $2.12 billion.

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Nvidia, AMD and Broadcom express interest in Meta’s offering

Against that backdrop, Meta introduced two offerings that combined would be worth around $35 billion. The company plans to offer $22.5 billion in Class A common stock and $12.5 billion in mandatory convertible preferred securities.

Nvidia, AMD and Broadcom are among the firms that have expressed interest in the offering, potentially buying up to $5 billion in shares. However, their interest is not binding, so they can buy less shares or they can just cancel it out.

Their involvement comes as Meta increases demand for processors and other equipment needed to operate its expanding AI infrastructure. The company expects to finance these investments from equity sales, operating cash flow, debt and partnerships.

Beyond the products themselves, Meta’s investments in infrastructure might generate additional revenue. In July, the company was exploring a $10 billion computing capacity agreement with Anthropic, although the proposed arrangement remained under discussion.

Meta prepares another $60 billion stock offering for 2027

The first $35 billion is just the beginning of how Meta plans to raise equity money, and the company has a potential $95 billion in equity capital. The remaining $60 billion would be raised via a proposed share-sale program that would include new nonvoting Class C stock.

Unlike the current offering, the proposed program would allow Meta to sell shares gradually as its funding needs develop. The program is expected to go live in the first quarter of 2027, when the company’s Class C shares begin trading.

The extra funds have yet to be secured, though, and Meta has not agreed to the sale of all the amounts. At the end of September, the company had around $82 billion in liquid assets and operating cash flow of $97 billion through September.

Meanwhile, proceeds from the current common-stock offering will arrive when Meta settles its forward sale agreements. Those settlements can occur on selected dates through November 19, 2027, as the company continues financing its infrastructure projects.