$95 billion equity financing: Meta (META.US) AI capital war begins

According to Woofun AI, Meta Platforms (META.US) has officially launched a large-scale equity financing process to meet the huge capital requirements for artificial intelligence infrastructure construction. On October 26, local time, the company announced the launch of a public offering of about 35 billion US dollars of common shares and mandatory convertible preferred shares, and plans an on-market share issuance (ATM) program of up to about 60 billion US dollars, with a total potential funding limit of 95 billion US dollars.

This move marks a critical shift in Meta (META.US)'s shift from simply relying on operating cash flow to diversified financing strategies after the AI competition entered a capital-intensive phase.

The current financing structure is hierarchical and aims to balance the efficiency of capital acquisition with the protection of shareholders' rights and interests. The portion of the public offering of approximately $35 billion, including approximately $225 billion of Class A common stock, which will be executed through a forward sale agreement;

At the same time, approximately $12.5 billion of Series A compulsory convertible preferred shares were involved, corresponding to the issuance of 250 million depository shares. Notably, Nvidia (NVDA.US), AMD (AMD.US), and Broadcom (AVGO.US) have expressed their intention to buy up to $5 billion of Meta (META.US) Class A common stock. Although these intentions are not legally binding and the terms of the subscription are consistent with other investors, the appearance of these three chip giants suggests that industrial capital endorses Meta (META.US)'s AI strategy.

According to data compiled by Woofun AI, another ATM program of up to about $60 billion plans to use Class C non-voting common shares. The program is expected to launch as early as the first quarter of 2027, allowing companies to sell shares in stages according to market conditions. Since the relevant agreement has not yet been signed, the timing, scale and terms of the final issuance are still uncertain, so the $95 billion limit is only a potential upper limit, not an established financing amount.

This design allows Meta (META.US) to raise capital while controlling the impact of additional shares on the voting rights structure through unvoting shares, but the risk of dilution of economic equity still exists.

The core driving force behind the funding is Meta (META.US)'s continued rising capital expenditure. The company expects capital expenditure of $135 billion to $145 billion in 2026, mainly to expand infrastructure and computing power capacity to support AI applications in core businesses, as well as new business lines such as personal AI agents, enterprise products, and AI glasses.

Although Meta (META.US) still has strong cash generation capabilities, with third-quarter revenue reaching US$64.6 billion, up 26% year over year, and holding approximately US$82 billion in cash, cash equivalents, and marketable securities by the end of the third quarter, the huge scale of AI investment is causing market concerns about cash flow pressure. Meta (META.US)'s credit default swap (CDS) index rose to a high level after the release of the previous financial report, reflecting a shift in investors' focus from the growth potential of the AI business to the sources of capital and return on investment required for huge investments. Meta (META.US) said it will combine operating cash flow, investment-grade debt, strategic cooperation and equity capital to provide financial support for AI and other business development to ease the pressure on a single financing channel.

As the AI race deepens, the core test facing Meta (META.US) has gone beyond the scale of computing power investment to the sustainability of commercial returns. The company has launched Muse, a personal AI agent, and Muse Wonder, an AI model to try to incorporate AI capabilities into advertising, consumer products, and corporate services, but the user growth and technical performance of new products must be converted into sustainable revenue and cash flow. Although the $95 billion funding plan provides the company with more capital space, the long-term value still depends on whether the AI investment can generate sufficient returns to cover construction and operating costs. While equity financing relieves short-term capital pressure, how to balance shareholder dilution and long-term growth will become Meta (META.US)'s key proposition in the AI era.