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Meta is pursuing a bond sale of between $20 billion and $25 billion on Tuesday, split roughly two-thirds in dollars and one-third in euros, according to people familiar with the matter. The offering follows Meta's disclosure last month that full-year capital expenditure will reach $135-145 billion, and comes after S&P Global Ratings revised its outlook on the company to negative.
Owners of small business websites say they are being hit with heavy traffic from Meta's AI web crawlers, straining servers and disrupting normal operations. The complaints follow Meta's announcement of upcoming terms changes that would expand how AI crawlers can access data from business accounts.
S&P Global Ratings lowered Meta Platforms' outlook from stable to negative while keeping its AA- credit rating, citing concerns about heavy capital expenditure and negative free cash flow. Meta posted negative free cash flow of $2.12 billion in the third quarter and projected full-year capex of $135 billion to $145 billion. The company's shares fell 7% after earnings and dropped 15% for October, its worst month in four years.
Nvidia will invest $3 billion as part of Meta Platforms' equity offering, according to the report. The move accompanies a broader expansion of the two companies' partnership around Meta's AI system Muse.
Meta Platforms said it intends to raise as much as $95 billion to support its large-scale investments in artificial-intelligence infrastructure, including efforts tied to what it calls personal superintelligence. The company did not detail the exact financing structure in the announcement.
U.S. markets wavered last week as fears about financing the AI buildout outweighed strong corporate earnings. Meta Platforms reported negative free cash flow for the first time since its 2012 IPO and flagged it may need hundreds of billions more in financing, triggering a Thursday sell-off that hit CoreWeave especially hard, down over 10% on the day and more than 10% for the week. The Dow still gained 0.4% for the week while the S&P 500 fell 0.5% and the Nasdaq slipped 0.7%.
Meta Platforms has postponed the rollout of new commercial terms of service for business accounts following criticism from news publishers. The terms, announced earlier this month, were said by critics to grant Meta broad rights to crawl and scrape web content linked to those accounts. Meta has pushed the effective date back three weeks but says it still intends to implement the policy.
Meta disclosed in a quarterly filing that it created a new class of non-voting stock, effective January, that could help offset taxes Zuckerberg would owe if California's Proposition 40 billionaires tax passes on Nov. 3. In exchange, Zuckerberg has committed to remain a California resident for eight years, with exceptions for unforeseen circumstances. The 5% tax would apply to Californians worth over $1 billion; Zuckerberg's net worth is about $225 billion.
Meta Platforms disclosed in its third-quarter earnings report that it plans to split its stock by introducing a new class of non-voting shares. The company said the change is set to take effect in 2027.
Jim Cramer noted that the S&P 500 has climbed roughly 118% since bottoming on October 12, 2022, despite Fed rate hikes, a banking crisis, tariffs and the Iran conflict. He cited that a $10,000 investment at the bottom would now be worth about $23,061, with Nvidia and Meta Platforms—both held by his Charitable Trust—delivering far larger gains of 1,875% and 488% respectively.
Meta launched its autonomous AI agent Muse on Sept. 8, which can search, compare prices, and complete purchases on retail sites without human input at each step. The app has surpassed 5 million downloads and 3 million weekly active users, briefly overtaking ChatGPT atop Apple's U.S. App Store, while Meta's stock has risen more than 17% since launch.
On CNBC's Mad Money, Jim Cramer said established tech giants like Meta and Microsoft remain among the best ways to invest in AI, citing their management and multiple revenue avenues. He noted his CNBC Investing Club holds both stocks, pointing to Meta's Muse monetization plans and Microsoft's Copilot and Azure growth as reasons for confidence, with Microsoft shares recovering from a 52-week low of $350 to around $529. Cramer also mentioned AMD and Intel as semiconductor plays worth watching.