Meta to raise $30 billion in its biggest bond sale as AI expansion costs rack up

Social media giant Meta Platform will raise up to $30 billion in its biggest bond offering yet, it said in a filing on Thursday as Big Tech tries to fund a costly expansion of artificial intelligence infrastructure.

Meta, given a period of intense investment in AI that is creating significant cost pressures, has indicated that its capital expenditure next year will be “significantly larger” than in 2025.

The company’s shares closed more than 11% lower on Thursday as investors considered a 32% increase in costs compared with a 26% rise in revenue.

It is raising funds through a six-part bond sale with maturities ranging from five to 40 years. Meta last entered the bond market in 2022 with a sale of $10 billion.

The principal amount of the bonds ranges from $4 billion to $6.5 billion and co-managers for the sale include Morgan Stanley, Allen & Co. and Blaylock Van, among others.

Last week, Meta struck a $27 billion financing deal with Blue Owl Capital to finance its largest data center project, known as “Hyperion,” in Richland Parish, Louisiana, Meta’s largest private capital deal to date.

Morgan Stanley estimates that major tech companies including Alphabet, Amazon.com, Meta, Microsoft and CoreWeave are on track to spend $400 billion on AI infrastructure this year.

Meta is also investing heavily in attracting and retaining top AI researchers and engineers as the talent war intensifies among tech companies.

To further the company’s new and ambitious AI goals, CEO Mark Zuckerberg personally led an aggressive talent recruitment for its recently reorganized AI unit: Superintelligence Labs.

Meta CFO Susan Lee said employee compensation costs will be the second largest contributor to cost growth next year, especially AI talent.

Meta raised the lower end of its capital spending outlook this year to between $70 billion and $72 billion, compared to its prior forecast of $66 billion to $72 billion.

Fixed income news service IFR and Bloomberg first reported details of the bond sale on Thursday.

Reports of meta bond sales had prompted selling of US Treasuries for hedging purposes. Investors have been attracted to large new corporate bond issues amid widespread uncertainty in equity markets.