Meta plans $95 billion stock sale to pay for its AI build-out

What happened

Meta launched two underwritten offerings worth about $35 billion on Monday, the company said. One is $22.5 billion of Class A common stock sold through forward sale agreements with Morgan Stanley and Goldman Sachs, so the cash arrives later, by November 19, 2027 at the latest. The other is roughly $12.5 billion of mandatory convertible preferred stock, which turns into ordinary shares around August 2029. A further $60 billion program selling new nonvoting Class C shares is not expected to start before early 2027. The Financial Times (FT) reported that chipmakers Nvidia, AMD and Broadcom would be cornerstone investors; Meta said the three had shown non-binding interest in buying up to $5 billion. Meta shares slipped 1.6% in morning trading, CNBC reported.

What it means

Selling new shares dilutes existing owners: each share ends up representing a smaller piece of the business. Meta is choosing this route because its AI spending now runs ahead of the cash its business generates. Last week it raised its 2026 capital spending forecast to $135 billion to $145 billion, and its third-quarter free cash flow, the cash left after investment, was negative $2.12 billion.

The structure is designed to soften the blow. With a forward sale, banks borrow and sell shares now, but Meta only issues new stock and collects the money when it settles the contracts, on dates it chooses. The mandatory convertible preferred pays a dividend and only becomes common stock in 2029. Spreading the $95 billion across several years and instruments means the dilution arrives in stages rather than all at once. Meta itself warned in its filing that settling the forward sales would dilute earnings per share and return on equity.

The plan also leans on a new share class. Meta's board has approved nonvoting Class C stock, to be handed out as a one-for-one dividend to existing holders once a charter change takes effect on January 19, 2027. Meta said it expects to use Class C shares for future capital raising, employee pay and possible acquisitions. The filing says the Class C dividend will not change voting power, which founder and CEO Mark Zuckerberg effectively controls through high-vote Class B stock.

Meta is not alone. CNBC noted that Alphabet set out to raise $85 billion in June and that SpaceX closed a $40 billion debt deal to buy chips. Goldman Sachs estimates AI-related capital spending could reach about $7.6 trillion from 2026 through 2031. Meta said it will fund its plans with a mix of operating cash flow, investment-grade debt, partnerships and equity, after selling $25 billion of bonds in May.

The bull case

Meta still grew third-quarter revenue 26% to $64.6 billion, so it is raising money from a position of strength. Locking in funding now gives it a cushion to finish four planned AI superclusters and nearly double its infrastructure capacity this year. The slow-settling structure limits near-term dilution, and interest from Nvidia, AMD and Broadcom signals that key suppliers want a stake in Meta's success.

The bear case

A $95 billion stock sale tells investors that AI costs have outgrown even Meta's huge cash flow. Free cash flow has already turned negative, and the company carries about $454.5 billion of non-cancelable contractual commitments. Each future share sale shrinks existing holders' slice, and if AI products do not earn enough to cover the spending, the dilution may not be rewarded. Meta also warned the forward sales could add volatility to reported results.