Meta is raising $95bn to fund its AI push even as Elon Musk warned that hundreds of data centre start-ups face collapse over a cash crunch.
Mark Zuckerberg’s tech giant, which owns Facebook, Instagram and WhatsApp, is raising the money to bankroll the infrastructure and compute capacity needed for its push into AI, which it said was creating “significant opportunities” for the business.
It marks one of the largest share offerings ever and follows Google’s parent company Alphabet raising $90bn in June to fund its own AI expansion.
Meta will seek to raise $35bn through a public share offering before selling a further $60bn worth of shares on the market.
The Silicon Valley company has said it expects capital expenditure to hit as much as $145bn this year as it forks out on the new technology.
Chip giants Nvidia, AMD and Broadcom will act as cornerstone investors in Meta’s initial offering.
Their involvement will underscore concerns about the “circular” financing schemes underpinning the AI industry.
Nvidia has been accused of fuelling an AI bubble by pumping large amounts of money into companies that ultimately pay for its chips. The company has defended its investments, arguing its support is vital to the development of the industry.
It came as Mr Musk warned that hundreds of AI start-ups face collapse after being “shut off” from global debt markets.
The SpaceX chief executive said swathes of data centre providers would see “guppy-level death and consolidation” as funding dried up, in the biggest warning yet that the AI investment boom may be about to unravel.
Guppies are small fish with short lifespans that die easily if conditions change.
Mr Musk said technology companies without “substantial” revenue outside data centres were no longer able to borrow. He predicted a wave of collapses among specialised cloud computing providers, known as neoclouds.
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