Meta raises record AI stock offering to $97.5 billion

Meta Platforms ↘ 1.64% has launched one of the largest equity raises ever by a company to pay for its artificial intelligence buildout. The move came as investors keep swinging between enthusiasm about the AI boom and worry about how expensive it has become to fund. U.S. stocks rose Monday, October 26. The S&P 500 ↗ 0.56% gained 0.7%, the Dow Jones Industrial Average added 0.3% and the Nasdaq Composite climbed 0.8%, according to the Associated Press. Nvidia ↗ 0.90% rose 2.4% and gave the market its biggest lift, but other AI stocks stayed unsettled over the cost of borrowing to build data centers.arkansasonline.com

Meta's record raise

On Monday, Meta launched offerings worth about $35 billion in common stock and mandatory convertible preferred stock. It also plans an at-the-market program of up to $60 billion in new non-voting Class C shares, which are expected to start trading in the first quarter of 2027, Reuters reported. On Tuesday, Meta raised the common stock portion from $22.5 billion to $25 billion, priced at $625 a share. That brings the total plan to $97.5 billion, according to Reuters. Nvidia, Advanced Micro Devices ↗ 5.45% and Broadcom ↗ 4.00% have indicated interest in buying up to $5 billion of the shares. Nvidia said it will put $3 billion into the offering as part of a wider partnership on Meta's Muse models. The AP noted that critics of "circular financing" argue such deals raise the risk if AI falls short of expectations. Meta shares ended Monday down 1.9% after swinging between gains and losses.rmb.reuters.com+2

SpaceX leases its chips

SpaceX also said Monday it has made a binding commitment to an approximately $40 billion master finance lease with an entity managed by Apollo Global Management ↘ 0.10%. The lease will supply Nvidia's next-generation Vera Rubin chips, Apollo said. Each lease runs a little over five years. The company expects to close the deal by year-end, with leases starting in the first half of 2027, Reuters reported. CoreWeave ↗ 7.94%, which borrows to buy computing power that it rents out, swung from a 5.5% drop to a 6.6% gain before ending up 1.8%.apollo.com+2

Strain beneath the surface

The Washington Post reported that tech companies are racing to borrow or raise other people's money for an estimated $10 trillion in AI spending, and that even Silicon Valley giants are bleeding cash. In a Reuters column, Mike Dolan argued that last week's AI turbulence showed how trouble in one part of a "cross-financed ecosystem" can spread across asset classes. He cited Societe Generale Société Générale S.A. strategists, who warned of a "breakdown in volatility suppression." Morgan Stanley ↗ 1.86% still expects AI investment to grow 50% in 2027. But it cautioned that "the capital will be there, but increasingly on different terms for different borrowers."reuters.com+1

Investors will look for more answers this week. Alphabet ↗ 0.84% and Microsoft ↘ 0.24% report results on Wednesday, and Amazon Amazon.com, Inc. ↗ 1.61% reports on Thursday.arkansasonline.com