Meta Platforms (META) is poised to invest a significant amount of money to position itself at the forefront of the artificial intelligence revolution, but investors and at least one analyst firm appear to be nervous about the plan.
Meta shares were down more than 10% at last check Oct. 30, following a Bloomberg report that the social media company is looking to sell at least $25 billion of investment-grade bonds.
Meta expects 2025 capital expenditures between $70 billion and $72 billion.
The company spent $37.3 billion on capex in 2024, an increase driven by AI.
Meta expects total expenses and capex spending to grow significantly faster in 2026 than in 2025.
The company has reportedly already received orders of about $125 billion in what is expected to be the largest U.S. corporate bond sale of the year.
The news comes a day after CEO Mark Zuckerberg said the company would spend even more aggressively on AI in the coming year than it has in the past.
It’s looking to issue notes in as many as six parts, ranging from five to 40 years, according to the report, with the 40-year bond holding a 110 basis-point higher yield than benchmark Treasuries. Meta was considering a 140 basis-point premium.
Zuckerberg described himself as “very focused” on building the Meta Superintelligence Lab, while also stating that Meta has “already built the lab with the highest talent density in the industry.”
However, that density has come at a steep cost, and analysts at Mizuho seem uncertain whether all this spending will ultimately pay off.
Meta went on a hiring spree earlier this year, amid reports that it was offering candidates compensation packages valued at up to $300 million over four years.
The New York Times reported that top researchers received more than $100 million in their first year through a mix of cash, stock, and incentives.
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Meanwhile, other reports indicate that Meta Superintelligence Lab employees are assigned to an employee badge-restricted zone near Zuckerberg’s desk at the company’s Menlo Park, Calif., campus, and that their names are hidden from the Meta internal directory.
Analysts at Mizuho aren’t convinced all of this spending will be fruitful for the company’s future or its near-term stock price.
“We see shares entering near-term purgatory as management backs away from investment guardrails (consolidated operating income growth), without the magnitude of upside to the core business investors want in exchange for that long leash,” analyst Lloyd Walmsley said.
