Meta eyes up to $25 billion bond sale to fund AI expansion

Meta Platforms Inc. is planning to raise between $20 billion and $25 billion through an investment-grade bond sale.

The move comes as the company accelerates spending on infrastructure to capitalise on the artificial intelligence boom, people familiar with the matter told Bloomberg.

The offering is expected to be split into as many as six tranches.

One of the portions could include a long-dated note maturing in 2066, with initial price discussions suggesting a yield of up to 1.8 percentage points above US Treasuries.

Deal structure and market participation

The bond deal is being managed by Citigroup Inc. and Morgan Stanley.

The planned issuance comes shortly after Meta reported stronger-than-expected first-quarter sales.

At the same time, the company raised its outlook for capital expenditures this year, signalling a deeper commitment to artificial intelligence infrastructure.

AI spending drives borrowing across Big Tech

Major technology firms, often referred to as hyperscalers, are increasingly turning to debt markets to finance large-scale investments in AI.

These investments include building data centres and acquiring specialised hardware.

Meta’s latest move follows a series of large debt deals across the sector.

Amazon.com Inc. raised nearly $54 billion across US and European bond markets last month.

Earlier this year, Alphabet Inc. priced around $32 billion in dollar and euro notes.

Meanwhile, Oracle Corp. secured $25 billion in a bond sale that drew peak demand of $129 billion.

Despite volatility linked to geopolitical tensions, including the conflict in Iran, investor demand for such debt has remained strong.

Market participants continue to seek exposure to the AI-driven growth narrative.

Rising capex plans spark investor concerns

Meta recently increased its projected capital expenditure for the year to between $125 billion and $145 billion.

This represents a roughly 7.4% increase from its earlier forecast, significantly exceeding analyst expectations.

According to a Bloomberg report, the four largest hyperscalers are now expected to collectively spend as much as $725 billion this year on AI-related investments.

Zuckerberg defends strategy as shares slide

Meta Chief Executive Officer Mark Zuckerberg reiterated his commitment to AI spending during a call with analysts.

He said he has “confidence” in the company’s decision to increase investments.

However, investor sentiment appeared cautious.

Zuckerberg acknowledged that Meta does not yet have “a very precise plan” for developing each AI product.

“I think we have a sense of the shape of where things need to be,” he said, while admitting that his answers might be “unfulfilling,” as cited in a Bloomberg report.

Shares of Meta fell as much as 9.5% in premarket trading in New York, reflecting concerns about the scale of spending and uncertainty around returns.

Strong demand persists despite risks

Meta’s previous bond sale in October attracted approximately $125 billion in orders, setting a record at the time.

The company also raised about $30 billion through off-balance-sheet financing linked to a special purpose vehicle associated with Blue Owl Capital Inc.

The latest planned issuance highlights the continued appetite among investors for high-grade corporate debt tied to the AI sector, even as questions remain about long-term profitability.