Meta plans to raise up to $95 bln through stock sales to fund AI

Meta Platforms plans to raise up to $95 billion by selling common and preferred stock as it seeks investor backing in the race for AI leadership, Bloomberg reports. The stock jumped 1.9% in New York premarket trading following the news.

According to a statement released on Monday, Meta will offer around $35 billion of common and preferred stock. It also plans to raise up to another $60 billion through an at-the-market program, which allows it to sell stock in the open market from time to time. The program will offer investors nonvoting Class C shares, which the company announced last week.

Over the last year and a half, Mark Zuckerberg has made AI development one of Meta’s top priorities. In September, the company unveiled Muse, a personal AI assistant capable of handling users’ everyday tasks. The app quickly topped mobile app charts, while Meta’s stock rebounded from its August low and ended the month with its best performance in 13 years.

The tech giant continues to ramp up investment in AI development. Alongside its latest quarterly report, the management raised the lower end of its 2026 capex guidance by $5 billion and now expects spending of $135-145 billion, versus $130-145 billion previously. The company stated that its contractual and lease commitments, primarily for AI infrastructure, had increased from $700 billion to $825 billion. Meanwhile, its enormous spending has pushed free cash flow into negative territory for the first time in years.

Meta’s stock plunged the next day, dragging the tech sector lower. In particular, investors fear that the company and other big tech players will take on more debt, Bloomberg reported. On Thursday, a gauge of Meta’s credit risk hit a record high, while its bonds weakened. Needham analyst Laura Martin sees Meta’s capital structure as the main risk. In her view, the planned issuance of nonvoting shares signals that the company is nearing its debt ceiling.

Many other analysts, however, see Meta as the leader in consumer AI thanks to Muse’s success and are comfortable with its spending. Morgan Stanley’s Brian Nowak described Muse as the “cleanest” winner among consumer generative AI products. BofA sees “open ended” growth for Muse and believes Wall Street will become more comfortable with rising infrastructure spending now that the commercial opportunities for new AI products are clearer.