Meta is selling nearly $100 billion of stock to fund AI spending, including $3 billion from Nvidia (NVDA). The offering includes $25 billion of common stock priced at $625 a share, $12.5 billion of preferred stock paying 6.5% that converts to common stock in 2029, and up to $60 billion of a new nonvoting class to be sold gradually from next year. Last quarter, capital spending of almost $34 billion outpaced nearly $33 billion of cash from the business, pushing free cash flow negative for the first time since 2012. Every shareholder also gets a free nonvoting share for each share owned, a structure that grew out of a dispute over Zuckerberg's taxes and keeps his control at about 61% of votes despite owning about 13%. Meta's five-year credit default swaps hit a record 127 basis points before easing, implying nearly a 10% chance of default over five years, up from about 4% a year ago, according to Yahoo Finance calculations.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
METAAI investmentdefault riskNvidia
Open a keyword to see other news on the same topic.
Related tickers and likely impact
META
▼ Likely negativeMeta Platforms
Relevance: high
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $1.7T |
| Close on 10/26/2026 | 630.47 |
| Change that session | -1.89% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- AI Spending Fears Threaten to Swamp Big Tech’s Strong Earnings
Alphabet, Microsoft and Amazon, part of tech giants valued at more than $10 trillion, are expected to post double-digit percentage revenue growth, but investors will focus on AI spending and when it becomes profitable. Meta shares closed down 6.1% on Thursday, their worst day since July, after the company raised its future spending commitments by $125 billion to $825 billion, and the price of its five-year credit default swaps hit a fresh high. Concerns about debt-financed AI buildout, including comments from CoreWeave and a Gartner estimate that more than $3.5 trillion of AI infrastructure spending could be impaired by 2030, have weighed on sentiment. Anthropic told investors its third-quarter revenue rose about 45% from a year earlier, a slower pace than in the second quarter. The Bloomberg Magnificent Seven Index is up 6.5% this year, trailing the 11% gain in the S&P 500 and the 15% gain in the Nasdaq 100.
- META Stock Set To Record Worst Day In Nearly Three Months As Investors Fret Over Negative Cash Flows Amid Raised Capex Floor
Meta Platforms (META) shares fell about 6% on Thursday as investors grew anxious over negative cash flow from heavy AI-related capital spending. In the quarter, free cash flow turned negative at $2.12 billion, and the company raised the floor of its full-year capex forecast from $130 billion to between $135 billion and $145 billion. The cost of insuring against default on Meta's five-year credit default swaps hit an all-time high, and the company announced a new nonvoting Class C stock to preserve founder-led governance. Filings show CEO Mark Zuckerberg had considered leaving California if a proposed wealth tax passed, but he said he will stay in the state after the new stock class is implemented. On Stocktwits, retail sentiment was bullish, retail chatter rose about 400%, and the stock is down about 2% year to date.
- Nvidia Is Taking a $3 Billion Chunk of Meta’s Equity. It’s Over to Broadcom.
- Meta reverses losses to rise as investors weigh $35 billion AI funding plan
Meta Platforms shares rose 1% after falling as much as 4% earlier in the session, reversing an initial selloff following the launch of roughly $35 billion in equity offerings to fund its AI infrastructure. The offerings comprise $22.5 billion in Class A common stock through forward sale agreements and about $12.5 billion in mandatory convertible preferred stock, led by Morgan Stanley and Goldman Sachs. Nvidia, Advanced Micro Devices and Broadcom have expressed non-binding interest in buying up to $5 billion of Class A shares on the same terms as other investors. Meta also plans a separate roughly $60 billion at-the-market offering of Class C nonvoting shares, expected to begin in the first quarter of 2027, and forecasts 2026 capital expenditures of $135 billion to $145 billion. Free cash flow turned negative in the third quarter as capital spending rose, even though Meta generated $97 billion in operating cash flow in the first nine months of 2026.
- The All-In Hosts Asked If the AI Trade Is Cracking. Here’s What Income Investors Should Do
The All-In hosts asked whether the AI trade is breaking as CoreWeave’s stock sold off, with its bonds marked down to 80%. CoreWeave borrows heavily to expand its GPU capacity: second-quarter revenue rose 112.3% to $2.575 billion, but free cash flow was -$5.74 billion and interest expense climbed to $640 million from $267 million a year earlier. Its 2032 bonds yielded 15% versus 5.09% for the 10-year Treasury, while the bulls argue demand remains massive and operating cash flow turned positive at $679 million. The article also points to Procter & Gamble and ADP as income-investor examples, both with yields below the 5.09% Treasury.
- AI Is Pushing Corporate Bond Sales to an All-Time Record
US investment-grade corporate bond sales are on track to reach $1.76 trillion after deals priced on October 26, 2026, an annual record according to Bloomberg that tops the roughly $1.75 trillion borrowed in 2020. AI borrowing is behind much of the jump. The iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) closed at $104.02, up 0.15%, as falling Treasury yields offset the supply, with the 10-year yield at 5% versus 5.31% on October 5. Lenders are demanding higher rates on new AI deals: SpaceX's roughly $40 billion Apollo-led financing could carry a rate of up to 8.75%, versus 6.65% on its June bonds. On October 16, five-year credit default swaps on CoreWeave rose above 1,100 basis points, implying about 64% odds of default within five years, although none of these companies has defaulted.
Related markets
Latest news
- EU Gas Prices Hit 4-Year High
European wholesale gas prices topped 97 euros per megawatt-hour on October 26, the highest since December 2022, as EU gas storage was only 74.62% full on October 25. LNG flows through the Strait of Hormuz remain about 80% below pre-conflict levels following the US-Israeli war on Iran. Trading Economics forecasts 98.20 euros/MWh by the end of Q4 2026, while in the UK one-month gas futures rose 4%, and Brent is around 115 USD a barrel. EDF expects UK household energy bills to rise 27% in January 2027, lifting the average annual bill to nearly 2,200 pounds (2,940 USD). Berlin plans to ask households and businesses to contribute over 3 billion euros across 10 years to an emergency gas reserve, while the EU's Russian gas share fell from about 45% in 2021 to about 12% in 2025.
- Can Anthropic prove it can rival Big Tech? Its balance sheet says yes.
Host Ejaaz Ahamadeen of In the Loop says Anthropic's (ANTH.PVT) S-1 filing shows about $132 billion in cash, far from the near-zero balance rumored in recent months despite heavy compute spending. Around $19 billion of that is reportedly in investment-grade contracts, giving the company funds for large capital expenditure commitments. He compares that cash pile with those of Apple and of Google and Meta before they spent heavily on GPUs, saying Anthropic now plays in the same league. He notes that Anthropic lacks the revenue diversification of Google or Meta, making it a more precarious bet as an IPO candidate because it relies solely on AI.
- Anthropic's 'tension' between profitability & 'public good': IPO expert
Jim Neesen, managing partner of The Connor Group, tells Yahoo Finance's Brian Sozzi that Anthropic's (ANTH.PVT) IPO filing is unusual because it is a public benefit company. Seven founders hold 50.1% of the company, and a board approved by a trust fund will oversee it, with social benefit built into its mission alongside profit. He sees a group of founders making joint decisions as potentially positive, but says the structure will be tested at this scale and growth rate. He describes a tension between profitability, public good and the quarterly pressure from investors, and notes Anthropic has not yet published its total addressable market (TAM), though he expects it to be north of 10 trillion or 20 trillion, citing SpaceX's claim that AI is over 29 trillion.
- Our Model and Wall Street Agree on Amazon's Target. Now the Quarter Has to Deliver.
The 24/7 Wall St. model sets a $329.70 price target for Amazon, 31.68% above the $250.38 close, with a buy rating at 70% confidence, within 0.61% of the Wall Street consensus target of $331.72. Q3 results are due October 29 after the close, with guidance for $197–202 billion in sales and $22.5–26.5 billion in operating income, versus $17.4 billion a year earlier. Q2 revenue rose 19.6% to $200.61 billion and AWS grew 37% to $42.23 billion, yet shares sit about 12.8% below their 52-week high of $287.20. The bear case of $283.71 points to about $220 billion of 2026 capex, trailing free cash flow of -$7.6 billion and long-term debt of $119.1 billion, while the $378.96 bull case rests on an AWS backlog of $496 billion. The article says the thesis depends on Q3 operating income and AWS growth staying near the Q2 pace.
- BC-Most Active Stocks
The article lists the most active stocks on the Nasdaq Composite, NYSE and NYSE American, published by AP on October 27, 2026 (GMT+7). On Nasdaq, Solowin Holdings led with 270,698,916 shares traded, followed by 22nd Century Group (195,124,628) and Nexera Technologies (135,322,623). Large technology names also appeared, including NVIDIA (19,429,424 shares) and Tesla (13,463,944 shares).
- The real source of tech market volatility is cash flow, not credit default swaps
Yahoo Finance Executive Editor Brian Sozzi argues that the main driver of volatility in tech stocks is collapsing free cash flow at hyperscalers, not credit default swaps, since that cash will be used to repay the debt they take on to fund AI infrastructure. Citing Evercore ISI's Julian Emanuel, he notes the hyperscaler group of Meta, Amazon, Google, Microsoft, Oracle and SpaceX is expected to have free cash flow near negative $200 billion over the next year. Meta posted negative free cash flow in its third quarter for the first time since 2012, while SpaceX burned about $9.9 billion, and neither company signaled a slowdown in spending. Similar commentary is expected from Google, Amazon and Microsoft when they report this week, which supports Emanuel's view of more quarters of negative free cash flow.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.