On Saturday we asked who pays for AI once one of its biggest spenders outruns its cash. Meta answered before Monday's open: its shareholders, and possibly the companies that sell it chips.
Meta launched about $35 billion of stock sales and plans up to $60 billion more next year. Meta said Nvidia, AMD and Broadcom may buy up to $5 billion of the shares.
Some of the money Meta spends on chips could come back from the chipmakers as equity. That makes AI demand harder to read, not weaker.
That's today's Sip.
First, the session. AI stocks rallied, Brazil fell apart and crypto stocks lagged.
3 MOVERS IN 3 MINUTES
1. Brazil's selloff stayed in Brazil.
The first session after Lula's reelection tripped São Paulo's circuit breaker at the open, the first since 2020, and the Ibovespa fell as much as 17%. By the central bank's closing reference rate the dollar was up about 9% against the real, and the iShares MSCI Brazil ETF traded about 20% lower. The Treasury canceled this week's fixed-rate and inflation-linked bond auctions, keeping only its Selic-linked sale on the calendar.
This morning's test was the first hour in São Paulo. It brought no finance-minister pick, and the government's own debt office pulled back from fixed-rate and inflation-linked borrowing. Contagion didn't show up: by the close the broad emerging-markets ETF had slipped about 0.3%, and the Mexican peso firmed.
2. Anthropic filed to go public, and chip stocks rallied.
Anthropic filed to list on the Nasdaq as "ANT," with the share count and price range not yet set. First-half revenue was $16.3 billion, up from $1.2 billion a year earlier, and the operating loss narrowed to $693 million from $2.1 billion. Most of the $80.7 billion net loss, about $72.4 billion, came from changes in the fair value of convertible notes and similar instruments, an accounting charge rather than cash spent.
Nvidia (NVDA) rose about 2.4% and the Nasdaq about 0.8%. On Polymarket, the contract on an Anthropic listing by Nov. 30 jumped to about 91 cents from 61 cents. Kalshi's "before Dec. 1" contract rose to 91 cents from 69, while its "before Nov. 16" contract held near 11 cents. Kalshi pays only on SEC effectiveness, pricing or an exchange assigning a ticker. Traders on both venues expect an IPO this year. The venues pay out on different milestones.
3. Strategy sat out a week. Strive paid 15% to keep buying.
Strategy (MSTR) said it bought no bitcoin from Oct. 19 to 25 and sold no common stock through its at-the-market program, spending $204.9 million to buy back its STRC preferred instead. Strive (ASST) bought 6,182 bitcoin at about $82,732 each and set up a program to sell up to $1 billion of 15% perpetual preferred. Bitcoin was near $80,000 late Monday, and Strategy fell about 4% as the S&P 500 rose.
Circle (CRCL) fell about 7% after Mizuho kept its Underperform rating, cut its target to $43 from $45 and argued that AI assistants could steer users from USDC toward insured, higher-yield products. In crypto too, the question is what it costs to keep buying. Strategy reports Thursday.
3 SIGNALS FOR TOMORROW
1. American Tower reports first. American Tower (AMT) reports before Tuesday's open. It's the first tower owner to speak since Thursday's report that SpaceX wants space on at least 80,000 U.S. cell sites, which no company has confirmed. If American Tower names SpaceX as a prospective tenant, Friday's repricing gets a source. If it doesn't, the story stays unconfirmed. Visa (V) reports after the close.
2. A $70 billion five-year auction meets a hike bet nobody can explain. Kalshi's contract on a quarter-point hike Wednesday rose to 9 cents from 6 on about 1 million contracts, and Polymarket's no-change contract slipped below 93 cents from 94.5. No Fed comment or major data release explained it. Weak demand at Tuesday's five-year auction would put a price on the hike risk prediction markets started buying. Strong demand would make those bets look like hedges.
3. Israel votes as Washington decides on Iran. Polls close at 4 p.m. Eastern, with Gadi Eisenkot near 56 cents on Polymarket to be the next prime minister and Benjamin Netanyahu near 28. President Trump says he is deciding whether to make a deal with Iran or "finish it off," and Brent swung more than $3 on Monday. A new Israeli government would change Washington's partner on Iran. Polymarket's contract on the U.S.-Iran ceasefire holding through Oct. 31, near 87 cents, will show whether traders think the vote matters.
Now, back to Meta.
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The Sip
Meta is selling stock, and its chip suppliers may be buyers
Meta (META) launched about $35 billion of stock sales before Monday's open. The deal includes $22.5 billion of common stock and $12.5 billion of mandatory convertible preferred. It also plans an at-the-market program of up to $60 billion, starting no earlier than the first quarter of 2027, with terms not yet set. At up to $95 billion, it's the largest equity raise in Meta's history, and it equals nearly 6% of the company's market value at Friday's close.
The stock fell about 2%, on a day the Nasdaq rose about 0.8%.
Saturday's question, answered
Meta's third-quarter capital spending was $34.91 billion, more than its $32.79 billion of operating cash flow, and it expects $135 billion to $145 billion this year. Its funding list now reads "operating cash flow, investment-grade debt, strategic partnerships, and equity capital."
Equity is new on that list for Meta, but not for the group. Barron's says the deal echoes Alphabet's $84.75 billion equity raise in June, which also paired stock, mandatory convertibles and an at-the-market program. If both companies sell everything they've lined up, the two will have raised about $180 billion of stock since then. Meta bought back no Class A shares in the first nine months of this year. Now it's a seller.
The suppliers on the other side
Meta said Nvidia, AMD (AMD) and Broadcom (AVGO) indicated interest in buying up to $5 billion of the common stock, more than a fifth of that tranche. The indications aren't binding.
All three sell chips to Meta. In February, Nvidia agreed to sell Meta millions of AI chips over several years. AMD agreed to sell up to $60 billion of chips over five years, in a deal that gives Meta the option to buy up to 10% of AMD, Reuters reported. Equity could now run both ways between AMD and Meta.
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None of this makes the demand fake. It makes the order book a less independent signal. When vendors help fund the buyer, a strong chip backlog tells you less about how much AI spending pays for itself.
Why a forward and a mandatory
Meta isn't short of cash. It ended September with about $82 billion, and it won't receive money from the common-stock sale at first. It settles the forward contracts on dates it chooses, through Nov. 19, 2027. The preferred converts into common stock around August 2029, with a dividend set at pricing that Barron's estimates could be about 6%.
One reading: Meta is locking in today's price for spending it hasn't paid for yet. The $60 billion program will sell non-voting Class C stock, which dilutes holders' economic stake but leaves Mark Zuckerberg's voting control in place.
The other way to pay
SpaceX (SPCX) showed another route the same morning. Elon Musk said Sunday that SpaceX had "closed" $40 billion of debt for chips. Monday's filing describes a binding commitment to a finance lease instead: an entity managed by Apollo (APO) will buy Nvidia chips and lease them to SpaceX for about five years, subject to closing conditions.
The funding stack now runs from cash flow to bonds to private-credit leases to common stock. For Meta, the cheapest layer no longer covered the bill last quarter.
What settles it
Start with the pricing. Watch the discount to Monday's close, the preferred dividend rate, and whether the final prospectus shows the chipmakers bought. Then Microsoft and Alphabet report Wednesday, and investors will compare their capital spending with their cash flow line by line.
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The Market Sips Takeaway
Meta's buildout now depends partly on investors willing to buy its stock. The open question is the price they'll demand.
- What would confirm it's cheap money: pricing close to Monday's close, a preferred dividend near Barron's 6% estimate, the chipmakers taking their full $5 billion, and the stock holding above the offer price.
- What would say it's getting expensive: a wide discount, shares trading below the offer price, or Meta's default swaps widening further after the deal.
- Where it shows up next: Microsoft and Alphabet on Wednesday and Amazon on Thursday, where any talk of outside funding matters more than the capex number. Chip suppliers' order books now carry a funding asterisk, and private-credit lessors such as Apollo now sit in the funding stack.
Meta used to spend spare cash buying back its stock. Now it's selling stock to keep spending.
UNTIL THEN, SIP SLOWLY!
The Market Sips Desk
Is Meta's stock sale a sign of strength or strain? Hit reply and tell us why.
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