Meta launches $35bn share sale to fund AI infrastructure

Funding the AI infrastructure

Meta has officially launched two separate share offerings totaling approximately $35bn to help finance its expanding AI operations. As reported by The Next Web, the company is looking for new ways to manage the high costs associated with its technological growth. These funds are intended for general corporate purposes, but the context of the move is tied closely to Meta's massive infrastructure needs.

The larger portion of this move involves $22.5bn of Class A common stock through forward sale agreements. Under these specific arrangements, Meta will deliver the shares to investors but will not receive the actual money until 19 November 2027 at the latest. This structure allows the company to secure future funding while managing its current balance sheet.

The second offering consists of about $12.5bn of mandatory convertible preferred stock. These shares are designed to pay a dividend and will eventually convert into common stock around 15 August 2029. Meta intends to set the specific dividend rate once the shares are officially priced. Both sales are being managed by the investment banks Morgan Stanley and Goldman Sachs.

The cost of computing power

The primary driver behind these share sales is Meta's aggressive spending on capital projects. The company expects to spend between $135bn and $145bn this year, with the vast majority of that money going toward data centers and computer chips. This spending is a direct result of the company's push to build out the computing capacity required for its AI models.

A significant portion of this investment is directed toward computing capacity, including Meta's deals with CoreWeave. These specific deals are now worth a total of $35bn. By securing these resources, Meta aims to support its suite of products, including the Muse agent which launched in September.

The financial weight of this expansion is already visible in Meta's recent performance. The company's free cash flow turned negative in the third quarter as its capital spending continued to rise. While the spending is high, Meta still generated $97bn of cash from operations during the first nine months of the year.

Investor and supplier interest

The market reaction to these announcements has been mixed, with Meta shares dropping by up to 4% on Monday before ending the day roughly 1% higher. Investors are closely watching how the company balances its massive spending with its ability to generate profit. The company currently holds about $82bn in cash and securities at the end of September to buffer these costs.

Interestingly, some of Meta's primary chip suppliers have shown interest in participating in the stock sale. Nvidia, AMD, and Broadcom have collectively shown interest in buying up to $5bn of the common stock. However, Meta has clarified that this interest is not binding, meaning the suppliers are not yet committed to the purchase.

The banks running the sales also have the option to purchase additional shares. Morgan Stanley and Goldman Sachs can buy up to $3.375bn more in common stock and 37.5 million more preferred shares within a 30-day window. This provides a secondary layer of liquidity for the stock offerings as the company seeks to stabilize its funding.

Long-term capital strategy

Meta is not stopping at these current offerings to fund its AI ambitions. The company has already outlined a separate program to sell about $60bn of nonvoting Class C shares on the open market. This program is scheduled to begin in early 2027, providing a massive influx of capital for the years following the current share sales.

While the company has not yet signed an agreement for the $60bn Class C sale, the plan indicates a long-term strategy of diluting equity to fund hardware. This approach allows Meta to continue its heavy investment in data centers without depleting its existing cash reserves too quickly. It reflects a shift toward using the stock market as a primary engine for AI growth.

By spreading these sales across different years and share classes, Meta is attempting to manage the impact on its existing shareholders. The mix of forward sales, convertible preferred stock, and future open-market sales creates a multi-year roadmap for funding its technological evolution. This strategy ensures that the company can keep building the infrastructure necessary to compete in the AI landscape.