Meta plans to raise up to $97.5 billion; Oracle caps additional financing for this round at $20 billion

On October 28, at the investor day held in Las Vegas, Oracle Chief Financial Officer Hilary Maxson announced that, through fiscal year 2030, the additional capital markets financing still needed for this investment cycle would be capped at $20 billion.

But that figure originally corresponded only to the remaining financing plan for fiscal year 2027, and she now called it "the last tranche of funding needed to complete the remainder of this cycle." At the same time, an announcement Oracle released that day also provided a timetable for free cash flow to turn positive in the second half of fiscal year 2028.

That day, Oracle's share price closed up 10.73%. According to Cailianshe, institutional analyst Anurag Rana believed that this spending plan and outlook were expected to ease market concerns that capital expenditure would remain elevated beyond the next two years. But over the following two trading days, the stock fell 3.45% and 6.37% respectively, and by the close on October 30 it was back near its level before the investor day.

On October 26, two days before Oracle's investor day, Meta launched a new round of financing.

According to Meta's offering announcement and the subsequently announced pricing results, the size of this equity financing was expanded from $35 billion to $37.5 billion; together with a proposed stock sale plan of up to $60 billion, the total comes to as much as $97.5 billion, excluding the over-allotment option. Its uses include supporting continued investment in AI infrastructure and personal superintelligence.

On October 21, Meta released third-quarter results showing revenue growth of 26%. While Mark Zuckerberg said "our investments are paying off," Meta also raised the lower end of its full-year capital expenditure forecast.

On October 22, the day after the earnings release, Meta's stock fell about 7%, and the Nasdaq Composite Index also fell about 2.6% that day. According to Reuters, investors were concerned about the time it would take for AI investment to pay off, and also worried that the non-voting Class C share arrangement Meta announced the previous day would open the door to future issuance and dilute existing shareholders' equity.

Bento Box Finance previously discussed the predicament of tech giants increasing investment while seeking returns. It tracked attempts to reduce computing costs, such as in-house chips and diversified procurement.

Several months later, spending is still climbing.

In this third-quarter report, Amazon maintained its full-year cash capital expenditure plan of about $220 billion, and Alphabet also maintained its plan of $195 billion to $205 billion. Both companies also said on their respective earnings calls that they expected capital expenditure to increase significantly further in 2027.

The bill for the year immediately ahead is still not the end of the expansion.

Capital is beginning to care more about the length of the wait. On October 22, when discussing the returns on AI investment, Matthew Maley, chief market strategist at Miller Tabak, told Reuters: "It is becoming increasingly clear to people that this will take much longer."

Meta also wants to issue new shares

Meta's earnings gave reasons for both optimism and anxiety almost at the same time.

On October 21 local time, Meta announced third-quarter results for the period ended September 30, 2026. During the reporting period, the company's revenue was $64.601 billion, up 26% year on year; of that, advertising revenue was $63.061 billion, up 26% year on year, while ad impressions and average price rose 10% and 14% respectively.

On the subsequent earnings call, Meta Chief Financial Officer Susan Li said that a series of recommendation improvements for Instagram Reels in the third quarter increased viewing time by more than 4%. Among them, the new model ranks a group of videos at the same time rather than evaluating them one by one, and the system has also incorporated richer viewing-time signals.

Meta's newly launched personal AI agent Muse can assist with shopping and also connect to users' email, calendar and other services. Zuckerberg said on the call that a month and a half after launch, more than 10 million people in the United States and Canada had completed setup.

During the Q&A session, Evercore ISI analyst Mark Mahaney asked about commercialization. His question was fairly direct: Meta has often first grown the users and usage of new products before considering how to make money, and Muse's operating costs may be much higher, so can the company still follow the old pace this time?

In response, Zuckerberg expected that this time the company would "begin commercialization earlier than is usual." He explained that both the cost and the scale of the commercial opportunity for Muse are large, and the company needs to increase revenue and improve computing efficiency at the same time in order to continue expanding computing power and bring the product to more users.

Susan Li also acknowledged that investment in the superintelligence lab "will take longer to generate returns than the core business."

Muse is not an exception. On the cash spending side, this change has already structurally altered Meta.

The earnings report shows that in the third quarter, operating activities generated $32.786 billion in cash, capital expenditure reached $34.906 billion, and free cash flow was negative $2.120 billion. Meta also raised the lower end of its full-year capital expenditure forecast from $130 billion to $135 billion, while keeping the upper end at $145 billion. (Capital expenditure here includes the principal of finance leases.)

Meta has also reduced cash returned to shareholders.

According to the third-quarter 10-Q report Meta filed, in the first three quarters of 2025, about $26.2 billion in cash was spent on repurchasing Class A common stock; by comparison, in the same period this year, that expenditure was zero. The same document shows that from November last year to May this year, Meta issued bonds twice, totaling $55 billion.

Keeping the buyback money and borrowing bond money, Meta still hasn't finished raising funds.

According to the pricing announcement, the $37.5 billion offering consists of $12.5 billion of mandatory convertible preferred stock and a $25 billion forward sale arrangement for common stock. Meta subsequently disclosed that the depositary share offering corresponding to the former was completed on October 29, and the related preferred stock must be converted into common stock in the future; the latter will not pay Meta initially and is expected to be settled and paid on or before November 19, 2027.

Another stock sale plan of up to $60 billion is intended to use non-voting Class C shares, and is expected to be launched as early as the first quarter of 2027, after Class C shares begin trading, and then gradually sold to the market.

The companies that sell computing power equipment have also given funding plans.

Meta initially disclosed that Nvidia, AMD and Broadcom intended to subscribe to up to $5 billion of common stock in total. On October 27, Nvidia and AMD respectively announced that they would invest $3 billion and $1 billion in this equity offering.

However, a cash shortfall of $2.1 billion in a single quarter cannot explain a fundraising scale of nearly $100 billion.

Meta's third-quarter report shows that at the end of September, the company still held about $82.5 billion in cash, cash equivalents and marketable securities, and free cash flow for the first three quarters was still a positive $11 billion in total.

With cash still on hand and the ability to continue borrowing, why does Meta also add equity financing?

Meta's preliminary information statement on the equity restructuring submitted to the U.S. Securities and Exchange Commission on October 21 provides a more direct explanation: the special committee believed that existing capital was sufficient to meet current needs, but more funds might be needed in the future. If the company borrowed heavily at the scale management was considering, it could harm its credit rating. The document also named Alphabet, SpaceX, Anthropic and OpenAI, and proposed acting before more competitors absorb market funds.

The offering announcement on October 26 still listed operating cash flow, investment-grade debt, strategic partnerships and equity capital together as sources of funds. Meta defined this equity financing as a supplement to existing channels.

Zuckerberg also has one condition. The preliminary information statement on the equity restructuring dated October 21 also disclosed that he does not support large-scale equity financing that would significantly dilute his voting rights. Non-voting Class C shares thus have a use: new shareholders can put in money without gaining voting rights, and the existing control structure can be preserved.

But additional issuance will still dilute the economic rights of original shareholders.

Meta has prepared more fundraising channels for the next round of investment. Oracle likewise needs to continue raising money, but this time it also tried to answer: to complete this round of expansion, how much money does it actually still need to take from the capital markets?

Oracle begins to set a ceiling for financing

Forty-eight days ago, there was no answer to this.

On September 10, on Oracle's first-quarter fiscal 2027 earnings call, Deutsche Bank analyst Brad Zelnick repeatedly asked: peers are still increasing investment, so why can Oracle reduce capital expenditure after the peak in fiscal 2027 to 2028? Could there be a higher peak? When will free cash flow turn positive?

Maxson's answer at the time was: "We haven't given a specific timeline, and we don't intend to give one today." She also explained that once projects mature they will generate cash, but the company's overall free cash flow still depends on how much more money is invested to support growth.

One data center starting to collect money does not determine how much the next batch of data centers will cost. What Zelnick was pressing on was precisely whether there is an endpoint between these two things.

On October 28, Oracle laid out both the timeline and the amount.

According to the investor day announcement released by the company that day, Oracle expects capital expenditure to peak in fiscal 2027 to 2028 and decline in fiscal 2029; free cash flow is expected to turn positive in the second half of fiscal 2028, that is, between December 2027 and May 2028, and starting in fiscal 2029 growth will be supported by its own cash flow.

Before then, additional capital market financing still needed for this investment cycle through fiscal 2030 is capped at $20 billion, with equity and new debt expected to each account for about half. This excludes refinancing of old debt and also excludes the $20 billion equity financing already completed in the first quarter of fiscal 2027.

So, what arrangements for reducing upfront outlays does this Oracle financing commitment rely on?

In the CFO presentation materials that day, Maxson used the same 1-gigawatt project to compare three funding methods.

If Oracle pays for the equipment itself, capital payments in the first two years would be about $37 billion. If suppliers provide five-year financing for 70% of hardware purchases, payments in the first two years would fall to about $18 billion. At the same time, annualized revenue after the project reaches full operation would still be about $16 billion. In other words, suppliers advance part of the equipment payment, and Oracle repays principal and interest later.

Another path is to have customers provide most of the hardware. Under the same model, Oracle would need to pay only about $6 billion in the first two years, but annualized revenue after full operation would also fall to about $11 billion. If customers buy the equipment themselves, Oracle advances less money and also collects less corresponding revenue.

With customer prepayments added, Oracle would not have to advance all the funds needed before the project starts generating revenue on its own.

In fact, these cooperation methods have long existed.

Oracle disclosed in its fiscal 2026 earnings announcement released on June 10 that customer prepayments and customer-provided hardware in large AI contracts totaled $75 billion. (This figure includes the value of hardware; it is not $75 billion in cash all received.) At the time, the company was still presenting an equity and debt financing arrangement of about $40 billion for fiscal 2027.

This time, Oracle committed that the $20 billion originally corresponding only to the remaining financing needs of fiscal 2027 will cover this round's additional capital markets financing needs through fiscal 2030. According to Oracle's forecast, customers and suppliers sharing upfront funding, the gradual collection of payments from projects already in operation, and the subsequent passing of the construction peak will together support this cap.

But this also comes with a condition: the funding arrangements of partners must keep pace.

In the investor day Q&A, KeyBanc analyst Jackson Ader asked Maxson whether the company would still need to go out and raise financing if the mix of supplier financing, customer-provided hardware and prepayments changed. To maintain this mix, would it need to turn away some customers?

Maxson replied that about 7 gigawatts of new capacity planned for delivery over the next two years or so has already been contracted, and most of this funding mix has already been secured. Her confidence in the $20 billion cap is based on existing customers, suppliers and these arrangements.

The day after Oracle reported its "last round," Amazon was again asked about investment and payback.

On October 29, during Amazon's third-quarter earnings call, JPMorgan analyst Doug Anmuth asked: if AWS continues to grow rapidly, how much capital expenditure will be needed? How long will it take for servers, networking and data centers to pay back?

Amazon CEO Andy Jassy first answered the payback question: Amazon is shortening the payback period for infrastructure, but there are differences across assets and financing methods, and he did not give a uniform number of years.

As for the scale of investment, he believes that opportunities will not wait for the company to build slowly. If investment could be spread over 25 years, things would certainly be easier, but "that is not the reality we are in." Amazon will still invest on a large scale to maintain its leading position.

The available data support this judgment.

According to Amazon's latest third-quarter report, AWS quarterly revenue was about $46 billion, up 39.3% year over year. But for the trailing 12 months ended September, Amazon's overall operating cash flow reached $168.3 billion, while free cash flow was still negative $42.4 billion.

In his 2025 annual shareholder letter released this year, Jassy explained that AWS often has to pay for land, power, buildings, chips and other costs 6 to 24 months before charging customers. He expects that a considerable portion of AWS capital expenditure in 2026 will convert into revenue in 2027 to 2028.

And on this earnings call, he also expected that investment in 2027 will be significantly higher than this year. Amazon's and Alphabet's disclosures over the years show that in the past two years, the scale of each new annual investment round has been expanding.

To reduce the funds it must pay itself during the construction period, Meta has also brought in partners.

According to the El Paso project arrangement announced by Meta in July and the third-quarter 10-Q, a fund managed by BlackRock holds 80% of the joint venture, and Meta holds 20%. The two parties bear about $14 billion of long-term infrastructure costs, including campus buildings, power, cooling and connectivity, in proportion to their stakes. Meta has signed the relevant lease agreements and, upon termination or non-renewal and satisfaction of other conditions, is responsible for compensating the portion by which the fair value of the assets falls below an agreed threshold.

This cooperation reduces the upfront construction funds Meta must bear itself, but also leaves future rent and conditional compensation obligations.

Both companies are using partnerships to reduce upfront funding, but they have given different arrangements for subsequent financing. Meta emphasized in its financing documents that current funds are sufficient and more may still be needed in the future, so it is expanding financing channels; Oracle, by contrast, uses contracted capacity and mostly secured funding arrangements as an important basis for this round's financing cap.

In the investor day Q&A on October 28, Deutsche Bank analyst Brad Zelnick pressed on expansion after this round. Co-CEO Clay Magouyrk explained that going from 1 gigawatt to 10 gigawatts is a steep increase. At the same time, he said he did not think there would be another expansion from 10 gigawatts to 100 gigawatts in 2030 to 2034.

As for whether rising construction costs will widen the funding gap, Piper Sandler analyst Billy Fitzsimmons also asked on site. Magouyrk explained that the next 18 months are both the fastest expansion phase and the phase in which the company has the greatest certainty about procurement prices: purchase orders have been issued and the relevant prices have been locked in. He expects that cost fluctuations further out can be absorbed by the cash flow that will increase by then.

On site, BofA analyst Tal Liani specifically confirmed: will this $20 billion be raised in fiscal 2027, and will no additional capital markets financing be needed in the following two years? Maxson gave an affirmative answer.

References:

1. "Oracle, up 10%," Cailian Press

2. "Steep bill for AI buildout punishes Meta, other tech favorites," Reuters

3. Third-quarter 2026 earnings announcement, Meta Investor Relations website

4. Third-quarter 2026 earnings call transcript, Meta, Quartr / Stock Analysis

5. Third-quarter 2026 report (Form 10-Q), Meta, U.S. Securities and Exchange Commission

6. Preliminary information statement for the October 21, 2026 equity restructuring (PRE 14C), Meta, U.S. Securities and Exchange Commission

7. Launch announcement and pricing announcement for the forward sale and offering of preferred and common stock, Meta Investor Relations website

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9. "NVIDIA and Meta to Expand Collaboration on Muse and Muse Family of Models Amid Robust Growth," NVIDIA

10. "AMD and Meta Advance Strategic Partnership to Power Meta's Superintelligence Infrastructure," AMD

11. El Paso data center joint venture project announcement, Meta

12. 2026 investor day announcement and CFO presentation materials, Oracle

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17. "CEO Andy Jassy's 2025 Letter to Shareholders," Amazon

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19. 2025 annual report (Form 10-K), Alphabet

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21. Oracle historical stock price data, Stock Analysis, data as of the close on October 30, 2026

This article is from the WeChat public account "Boxed Lunch Finance" (ID: daxiongfan), author: Xu Youyang, published by 36Kr with authorization.