Meta warns of a need for hundreds of billions of dollars for AI

Meta warned in a regulatory filing that its AI plans can cause a need for “hundreds of billions of dollars” in new money. The need can start in fall 2026 and continue for some years. Meta also reported negative free cash flow for the first time since 2012. Its shares fell 7% on Thursday, and more than 9% in the week.

How Meta will pay

Meta plans a new class of shares, Class C, in January. These shares have no vote. Each holder gets one Class C share for each Class A share. Meta can then get money and buy companies, and CEO Mark Zuckerberg keeps the voting control of Meta.

The numbers

• Meta shares: down 7% on Thursday, more than 9% in the week.
• CoreWeave, a cloud firm for AI with much debt: down 10% on Thursday.
• Nvidia shares: down about 1.5% in the week.

What is not known

Nvidia CEO Jensen Huang said that the need for capital is much more than the supply of capital. An investor group says the issue is not AI demand but money for it. It wants more clarity on how Meta will fund its AI work and earn money from it.

Insight: Spending plans run ahead of proven returns

The IMF found $300bn of deals in 3 years between large cloud firms and AI firms that are less strong. Gartner found that only 13% of firms see large AI returns, but 75% of CEOs plan more spending. This reads as a standoff: AI spenders must get money from lenders, and lenders can want proof first. For leaders, vendor risk is a funding risk.