Meta plans AI capital raise as future spending commitments rise to roughly $825 billion

Treasury yields fall as investors rotate out of AI-linked stocks

Meta Platforms announced Wednesday that it plans to create a new class of nonvoting stock to raise capital for developing and serving AI models, and disclosed that future spending commitments had risen to roughly $825 billion from nearly $700 billion in July. The disclosure followed record third-quarter revenue and shifted attention to how Meta and its peers would secure enough capital to fund the AI build-out, The Wall Street Journal reported.

A Meta regulatory filing noted that recent significant capital raises by Alphabet and SpaceX, alongside anticipated fundraising from Anthropic and OpenAI, had created an increasingly challenging fundraising environment. Meta said it would move proactively to raise funding before competitors absorbed the market’s available capital. The Wall Street Journal reported that the scale of capital required for the AI build-out was prompting large technology companies to seek substantial new financing, while investors questioned how the spending would be funded.

Michael Antonelli, a market strategist for Baird Private Wealth Management, said, “The growing concern with AI isn’t about technology anymore.” He added, “It’s ‘how can we all fund this at once?’”

The Wall Street Journal reported that signals Meta could soon seek additional capital helped prompt a broad rotation Thursday. Investors moved from shares connected to the AI build-out toward other assets, including U.S. Treasurys, home-builder shares and software-company shares.

Meta shares fell 7% Thursday, erasing $124 billion from the company’s market cap, and the tech-heavy Nasdaq composite tumbled 2.6% in its worst day since June. The S&P 500 fell 1.2%, while the Dow Jones Industrial Average ticked up less than 0.1%.

Stocks tied to the data-center build-out dropped, in many cases sharply. Alphabet, Amazon.com and cooling-equipment maker Vertiv Holdings declined, and the PHLX semiconductor index, which includes Nvidia and Micron, dropped 6.7%. SpaceX, which on Tuesday reported a profitable quarter and said it might merge with Tesla, declined 9.1%. Tesla fell 3.1% after the carmaker’s adjusted net income slid. The session was also unsettled by disappointing earnings from Tesla and fresh tensions in the Middle East, which pushed oil prices to their highest levels since May.

Stocks more removed from the AI trade generally performed well. Consumer-staple company Clorox rose 4.6%, and regional bank M&T Bank climbed 1.5%.

The 10-year Treasury yield fell below 5% in its largest one-day drop since March 2023, during a regional banking crisis. Tradeweb reported that the yield settled at 4.952%, down from 5.145% Wednesday. Separately, FRED’s DGS10 daily series recorded 5.13% for Oct. 22, 2026, a different daily series from the Tradeweb market-session close. Some analysts said the rally in Treasurys likely reflected investors rebalancing their portfolios more than fundamentally shifting their economic outlook.

The Wall Street Journal said concerns about AI investment have flared before when competition intensified, growth showed signs of slowing or data-center operators reported construction logjams. More recently, elevated interest rates and geopolitical uncertainty have raised doubts about whether debt-laden developers can sustain their rapid expansion.

Investor skepticism toward the AI trade grew in recent months, according to The Wall Street Journal. After hundreds of billions of dollars were invested in infrastructure build-outs, investors increasingly questioned whether user demand would generate returns commensurate with spending. Amazon, Alphabet and Microsoft were taking on heavy debt loads to fund expanding capital expenditures, raising concerns that higher borrowing costs could squeeze profit margins.

Meta reported Wednesday that its free cash flow went negative for the first time since it became a public company. On a call with analysts and investors, Meta executives didn’t reveal how much money they planned for capital spending in 2027, but said they “expect to continue investing aggressively.”

CoreWeave, a relatively new AI cloud computing company, remained under pressure because it has needed to rely on debt to finance its infrastructure build-out, unlike hyperscalers, which can also tap the cash flow from their existing businesses. Its bond prices were relatively stable Thursday, though the company had been at the center of investors’ anxieties last week. The bonds due in 2032 traded just under 80 cents on the dollar, down from almost 90 cents last month but only slightly lower than Wednesday, according to MarketAxess.

Jim Russo, portfolio manager at AllianceBernstein, said, “The financing constraint over just the last three to four months has become real.” He added, “It’s become a real headwind to growth as we move from 2026 into 2027,” especially for companies that are more dependent on external financing.

A slowdown in the pace of spending by tech companies could have broader implications, potentially cooling inflation and slowing economic growth, both of which would provide a boost to bonds by reducing pressure on the Federal Reserve to raise interest rates.