Meta raises $37.5 billion in a stock sale to fund its AI data centers

The manufacturers that sell Meta the chips for its data centers could also buy its shares. Nvidia, AMD and Broadcom have expressed interest in up to $5 billion of stock between them, Meta said on October 26. These expressions of interest are not binding. Mark Zuckerberg's company had just announced a share sale plan of up to $95 billion, intended to fund its AI infrastructure.

The first stage was placed right away. According to Investing.com, Meta placed $25 billion of common stock at $625 a share, versus $22.5 billion initially planned, and $12.5 billion of preferred stock, which will convert into common stock around August 15, 2029. That makes $37.5 billion, with closing expected on October 29. However, Meta will not receive the money from the common shares right away, as they were sold on a forward basis: it can deliver them whenever it chooses, up to November 19, 2027. A second stage, of about $60 billion, would involve gradually selling shares on the market starting in early 2027.

Why a profitable company is turning to investors

Meta is not in trouble. Its operations generated $97 billion in cash over the first nine months of the year. In the third quarter, its revenue rose 26%, to about $65 billion, according to Yahoo Finance. But over the same quarter, its costs rose from about $31 billion to $52 billion, and its operating income fell 37%, to $13 billion. These figures include a legal charge of $9.89 billion, tied to a settlement with US state attorneys general over teen mental health: without it, operating income would have reached about $22.9 billion.

Its investments, meanwhile, go mainly to data centers: Meta plans between $135 billion and $145 billion in capital spending this year. Even at the low end of the range, that would be more than its 2024 and 2025 spending combined (about $111 billion). The company is building four data center clusters of more than one gigawatt each and plans to nearly double its total capacity in 2026, TechSpot reports. Meta, which has been selling its closed Muse Wonder model since mid-October, justifies the operation by the "significant opportunities" it says AI is creating in its businesses, according to Yahoo Finance.

Non-voting shares, useful to the founder

The arrangement also benefits Mark Zuckerberg. The second stage will use new non-voting Class C shares, whose listing is expected in the first quarter of 2027. According to Yahoo Finance, Meta says this class will allow its founder to raise cash to pay the wealth tax being considered in California, without selling his existing shares or weakening his voting control.

Fears of a bubble

The announcement comes as doubts grow over the profitability of these investments. Ken Griffin, head of the Citadel fund, believes investors are "almost certainly" in an AI bubble, TechSpot reports. The market itself reacted little: before the open, Meta stock fluctuated between a 2% gain and a 0.4% drop, according to Yahoo Finance.

For businesses that are AI customers, the stakes are concrete: these mountains of investment will one day have to pay off, and current AI service prices depend on it. The hardest part is still ahead: the timing, size and terms of the remaining $60 billion have not been set, and no agreement has been signed, TechSpot notes.