Meta and AI stocks tumble as investors ask who pays for the build-out
Meta fell nearly 7 percent and the Nasdaq dropped 2.6 percent Thursday as investors turned from AI returns to how the rising spending will be financed.
Wall Street sent the AI build-out a very large invoice on Thursday, and Meta was among those opening it.
The Nasdaq Composite fell 2.6 percent, its steepest drop since June 5, according to Al Jazeera. The S&P 500 slid 1.21 percent. Apart from Apple, up 1.2 percent, every member of the "Magnificent 7" took substantial losses. Meta dropped nearly 7 percent after raising its 2026 capital spending projection to $135 billion to $145 billion while net profit missed expectations. Reuters put the Meta decline at 8 percent. Amazon fell 4.6 percent, Nvidia 4.4 percent, and Intel and AMD about 8 percent each. The Nasdaq now sits roughly 5.8 percent below its October 6 record.
The question has moved from whether the spending pays off to who funds it. Reuters reported that Meta said it would issue a new class of shares to raise money, and Wall Street expects higher interest rates to push more tech giants toward stock sales that dilute existing holders. Matthew Maley of Miller Tabak pointed to "the big question about the (return on investment) on all the spending."
The context is staggering: Gartner forecasts global AI investment of $2.7 trillion in 2026 and $3.6 trillion in 2027.
My take? Those are magnificent numbers, and magnificent numbers need a financing plan. The market just asked to see it.
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Sources
- US tech stocks tumble as investors fret over AI spending, Al Jazeera
- Steep bill for AI buildout punishes Meta, other tech favorites, Investing.com (Reuters)
Meanwhile at the anchor desk
Al Jazeera has Meta down nearly 7 percent and Reuters has it at 8. Seaport's Jay Goldberg says "nothing has changed." Meta's capex guidance just did, to $135 billion to $145 billion.
Reuters says a new share class is coming. The terms, size and timing are not in the coverage, which are rather important blanks in a dilution calculation.
