Meta (which owns Facebook, Instagram and WhatsApp) plans to offer $95 billion in shares to finance the development of artificial intelligence, the British newspaper FT reported. This was reported by Qazaqyia.kz citing Kursiv Media.
Use of funds
The raised money will go toward covering huge expenses on artificial intelligence infrastructure. Chipmakers Nvidia, AMD and Broadcom will act as the main investors.
Financial performance
Last week, Meta reported a 26 percent increase in sales in the third quarter, beating analysts' forecasts, and projected capital expenditures of up to $145 billion this year. The company warned investors that over the next few years it would need to raise "hundreds of billions of dollars" to finance artificial intelligence infrastructure.
The news caused the shares of the social network's founder and billionaire Mark Zuckerberg to fall 7% on Thursday.
Fundraising process
Meta launched its fundraising process today, planning to raise $35 billion as part of a guaranteed public offering of shares. The company also plans to raise another $60 billion under a market program.
"Artificial intelligence creates significant opportunities for Meta in its core business, as well as in developing new products and services," the Silicon Valley company said.
Meta's investments in AI are already yielding tangible returns through increased engagement, improved advertising efficiency and increased monetization, Meta noted. Mark Zuckerberg ranks sixth on Forbes' world list with $220.7 billion.
Investor participation
Nvidia, AMD and Broadcom, which supply Meta with chips and other computing infrastructure for the operation of artificial intelligence data centers, have expressed interest in becoming "key investors" in the share offering. Meta said the three American companies could jointly contribute up to $5 billion.
In a statement published last week, Meta indicated that it had agreed to spend more than $800 billion on leases and contracts related to data centers and power supply over the next decade, as well as to expand its portfolio of wearable AI devices such as Ray-Ban Meta smart glasses.
Market situation
Meta's deal was struck after Google's parent company Alphabet announced in June that it would raise $90 billion in equity financing, which, according to JPMorgan's lead bookrunner, became "the largest multi-tranche deal in history."
After SpaceX completed the largest initial public offering in history in June, Anthropic is expected to debut on the stock market by the end of this year.
Meta is seeking to catch up with OpenAI, Google and Anthropic at the "frontier" of artificial intelligence development. After an unsuccessful start, Zuckerberg's multibillion-dollar spending on AI in recent weeks has led to a couple of popular products: Muse Wonder AI, a new powerful model that stands alongside the most performant ones from OpenAI and Anthropic; and the consumer-oriented AI agent Muse, which has since attracted millions of users. launched last month.
However, Meta's huge expenses are beginning to affect its cash flows at a time when many lenders are becoming more cautious about debt-fueled spending on artificial intelligence infrastructure. Meta's latest fundraising scheme is part of a new complex share structure unveiled last week that will allow the company to sell shares to finance its AI investments without weakening Mark Zuckerberg's control over the company. The move may face opposition from shareholders after Meta abandoned a similar plan in 2017.