Meta $META sold $10.5 billion worth of investment-grade bonds — its largest ever debt sale, according to Bloomberg, which cited unnamed sources. The added cash will allow Meta to fund its costly AI efforts.
“Meta’s sale is a sign that their investment in AI is not slowing down and is likely to increase over the next couple of years,” said Bloomberg Intelligence analyst Robert Schiffman. “Meta has an ample amount of cash, but it’s a more efficient use of capital to borrow money in the bond market.”
Meta reported better-than-expected second-quarter earnings last week. Its revenues beat forecasts, and its AI spending wasn’t as hefty as analysts had believed. Its shares shot up 5% following the news.
But heavier AI spending is ahead. Analysts had foreseen Meta’s capital expenditures in 2024 hitting between $35 billion and $40 billion, and the company confirmed such costs in its earnings report, but raised the minimum expected spending amount to $37 million. JPMorgan $JPM’s Doug Anmuth said in a recent research note that Meta’s spending next year could reach as high as $50 billion.
Meta confirmed that it expects “significant capital expenditures growth in 2025.”
Mark Zuckerberg thinks Meta’s AI investments will begin to show their worth sooner than later. The CEO has said he thinks Meta’s recently-released Llama 3.1 will be “the most advanced in the industry” by the beginning of next year. And he’s willing to spend the money — and possibly overspend — to continue Meta’s AI advancements.