AI investment fervor persists: Orders for Meta offering are five times the shares on offer; NVIDIA and AMD participate

[Financial News] This month, Meta Platforms (hereafter Meta) received orders for five times the number of shares on offer in its new share offering to fund investment in AI facilities. NVIDIA and AMD also said they would take part in the offering.
U.S. financial news outlet Yahoo Finance reported on the 27th (local time), citing industry sources, that orders for Meta's common-stock offering came in at about five times the planned issuance.
Meta had earlier announced on the 26th that it would raise a total of $95 billion to expand data centers for running AI and related cloud facilities. It said it would initially raise $35 billion this year by issuing $22.5 billion in Class A common stock and $12.5 billion in convertible preferred stock, then raise another $60 billion in the first quarter of next year by issuing new nonvoting Class C preferred stock. On the 27th, Meta said it was increasing the size of its common-stock offering to $25 billion, bringing its total fundraising target to $97.5 billion (about 130 trillion won). It also set the common-stock offering price at $625 (about 830,000 won), a discount of about 2.7% to the closing price of $642 on the 23rd, and said it would issue 40 million shares. Meta shares fell 1.64% from the previous session to close at $620.19 on the NASDAQ in the United States on the 27th.
The convertible preferred stock offering was set at 250 million shares priced at $50 each. According to sources, orders for the $12.5 billion convertible preferred offering also came in at several times the amount on offer. Morgan Stanley and Goldman Sachs served as underwriters for the fundraising.
According to sources, more than half of all shares issued in the offering were allocated to institutions investing for the long term and to existing investors. In particular, the 15 investors receiving the largest allocations were allotted about 70% of all shares issued.
NVIDIA CEO Jensen Huang, head of the U.S. AI chipmaker, said in an announcement on the 27th that he would invest $3 billion in Meta's offering. The same day, NVIDIA rival AMD also announced it would invest $1 billion in the offering.
Meta, which is losing ground in the AI race to competitors such as Anthropic and Google, recorded a free cash flow (FCF) deficit of $2.12 billion (about 2.8316 trillion won) in the third quarter of this year because of its aggressive AI investment. It was Meta's first FCF deficit since 2012. Despite the cash-flow deficit, Meta plans to continue investing in AI by issuing new shares, and stock-market investors have responded with strong demand. The developments suggest that institutional investors remain highly interested in AI-related investments, even as excessive investment in AI infrastructure and the burden of borrowing have recently drawn attention as sources of market unease in the U.S. stock market.
[email protected] Park Jong-won Reporter