Steep bill for AI buildout punishes Meta, other tech favorites
META•Meta shares fell 8% after the company raised the low end of its annual spending forecast to $135 billion and said it would issue nonvoting shares to help fund AI spending. AI-related stocks and the Nasdaq also fell as investors weighed rising buildout costs and uncertain returns.
1. AI stocks sell off
Meta Platforms fell 8% on Thursday, its largest drop since July, after announcing plans to issue a new class of shares to help fund AI spending. Nvidia fell 4%, SpaceX declined 9%, and Lam Research dropped 12% after its results; the semiconductor index fell 6.5%.
2. Spending and cash flow
Meta raised the low end of its annual spending forecast to $135 billion from $130 billion, leaving the high end unchanged at $145 billion. It reported negative free cash flow of $2.12 billion in the third quarter, compared with positive free cash flow of $10.63 billion a year earlier.
3. Investor concerns broaden
Investors weighed the rising cost of AI infrastructure against uncertain returns, with concerns that higher interest rates could lead companies to sell shares to fund further construction. Nebius fell 8% after announcing a $3.5 billion credit line, while CoreWeave dropped 11%; the Nasdaq was on track for its largest decline in four months.
