Meta outlines $95 billion AI financing plan
Washington, Oct 26
Meta Platforms on Monday launched offerings worth approximately $35 billion and outlined a further $60 billion share-sale programme to support its Artificial Intelligence expansion.
The combined USD 95 billion figure represents planned financing, rather than money already raised. The larger, future programme remains conditional.
The initial offerings comprise about $22.5 billion in common shares through forward sale agreements and $12.5 billion in securities representing mandatory convertible preferred stock.
Meta said it would not initially receive proceeds from the common shares sold by the forward purchasers. It would receive funds upon future settlement of those agreements.
The planned $60 billion programme would involve its new Class C shares and is not expected to begin before the first quarter of 2027. Meta said no agreement for that programme had been entered into.
Chipmakers Nvidia, AMD and Broadcom have indicated interest in buying a combined $5 billion of shares in the common-stock offering. Those indications are not binding commitments.
Morgan Stanley and Goldman Sachs are leading the offerings. Meta said the financing would support its investment in AI infrastructure and personal superintelligence.
The announcement follows company executives' explanation last week of the substantial computing costs involved in expanding AI services.
During Meta's October 21 earnings call, chief financial officer Susan Li said the company's capital expenditure, including principal payments on finance leases, reached $34.9 billion in the third quarter. The spending covered servers, data centres and network infrastructure.
Free cash flow was negative $2.1 billion during the quarter, she said.
Li also described efforts to make AI services cheaper to operate. Meta expects improvements from more efficient models, better use of computing capacity during quieter periods and changes to how its systems generate responses.
These remain company expectations, rather than demonstrated future savings.
Chief executive Mark Zuckerberg told the call that the computing demands of Meta's Muse personal-agent service had constrained its geographical rollout. The service had initially been made available in the United States and Canada.
Li said shopping, personal productivity and creativity were its leading uses. She identified subscriptions as an initial route to generating revenue, while describing potential opportunities involving business services and commerce.
The company's earlier announcement of a new class of nonvoting stock provides the background to Monday's financing plan. The Wall Street Journal reported that existing shareholders would receive the new shares through a dividend, effectively creating a two-for-one split. The company said the arrangement would preserve Zuckerberg's voting control and other shareholders' voting power.
Meta's third-quarter results, released last week, showed revenue of $64.6 billion, up 26 per cent from a year earlier. Advertising across its family of apps accounted for $63.1 billion. Li said higher advertising prices and an increase in the number of advertisements served contributed to that growth.
— IANS
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