Meta's stock dropped more than 5% on Friday following a Financial Times report suggesting the company could potentially raise tens of billions of dollars through a stock offering to fund its artificial intelligence initiatives [1]. The report comes as Meta considers its options for raising capital, though the company has not hired banks and may not issue new stock, according to the FT. A Meta spokesperson dismissed the report as 'pure speculation,' but reiterated the company's commitment to pursuing capital in flexible ways to support AI growth, stating, 'We've been clear that huge opportunities lie ahead in AI, and we'll continue focusing on raising capital in the most flexible ways to support that' [1].
The news follows Alphabet's announcement earlier in the week that it plans to raise $85 billion from selling equity, an increase from its previous target of $80 billion. Alphabet has also raised its 2026 capital expenditure guidance by $5 billion to $190 billion, while Meta increased its own capex guidance in April to as high as $145 billion from a previous forecast of up to $135 billion [1]. Both companies are investing heavily in AI infrastructure, reflecting what they see as insatiable demand in the sector.
Market reactions have diverged for the two tech giants. Alphabet's stock has surged more than 115% in the last 12 months, outperforming all other megacap peers, largely due to its prospering cloud business that helps justify its substantial spending. In contrast, Meta's stock is down 13% over the same period, making it the worst performer among its peers [1].
Investors appear concerned about the scale of AI-related spending, as evidenced by Alphabet's stock being down for a fourth straight week despite its strong annual performance. The speculation around Meta's potential stock offering has contributed to its sharp decline, underscoring market apprehension about excessive capital expenditures and dilution risks [1].
CONCLUSION
Meta's shares experienced a significant drop amid speculation about a large stock offering to fund AI investments, highlighting investor concerns over capital expenditure and potential dilution. While Alphabet continues to outperform due to its cloud business, Meta's stock has lagged, reflecting differing market sentiment toward their AI strategies. The event signals heightened scrutiny of tech giants' spending plans as they compete in the AI race.