Meta plans $95B stock sale to fund AI ambitions
What's the story
Meta Platforms has announced plans to raise a whopping $95 billion in capital, primarily for its artificial intelligence (AI) infrastructure and superintelligence projects. The tech giant's shares saw a 1.6% increase in premarket trading following the announcement. NVIDIA, AMD, and Broadcom have shown interest in buying up to $5 billion of the offered shares, according to Meta's statement.
Fundraising plan
Meta's fundraising will be done in 2 parts
Meta's fundraising will be done in two parts. First, the company plans to raise $35 billion through underwritten public offerings. This is a sale of company stock with major backers including chipmakers NVIDIA, AMD, and Broadcom.
These "cornerstone investors" could buy up to $5 billion of the offered stock.
The second part involves a $60 billion at-the-market program where new common stock will be sold at market price in the future.
Investment focus
New class stock to protect Zuckerberg's control
The funds raised through this dual approach will be used to support "Meta's continued investment in AI infrastructure and personal superintelligence."
The company has also announced the creation of a new class C stock, which will be sold without diluting Zuckerberg's control over the company.
This comes at a time when other companies in the AI sector are facing flak from Elon Musk.
Sector concerns
Neoclouds facing financial challenges
Musk has warned that funding for smaller players in the AI sector is drying up, which could lead to their collapse.
He said that debt markets have almost entirely cut off access to money for any company that doesn't have substantial revenue independent of AI data centers.
This has raised fears over the financial stability of neocloud businesses due to their high levels of borrowing and uncertain market growth.