Meta stock (META) tumbled 11% this week after the company missed earnings and confirmed it would spend even more on artificial intelligence data centers. The tech giant now expects about $71 billion in capital expenditures, up from $69 billion, and warned that 2026 will be an even heavier year for spending. That guidance sent a clear signal that the AI arms race is still far from cooling off.
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For investors, the message was unsettling. Meta’s spending spree is swallowing more of its cash flow, with no promise that the return on those investments will arrive soon. The company’s commitment to expansion may strengthen its long-term AI position, but it also deepens short-term balance-sheet pressure and tests shareholder patience.
Big Tech Turns Toward Heavy Spending
The world’s largest tech firms once bragged about being “capital-light.” This story is over. Companies like Meta, Amazon (AMZN), and Microsoft (MSFT) are now funding massive physical infrastructure, from data centers to custom chips, to train and deploy AI models. As Doug Kass of Seabreeze Partners notes, the hyperscalers have transformed from asset-lean platforms into capital-intensive builders.
That shift means tech companies are behaving more like industrial firms. They are laying foundations, buying land, and raising debt. The promise of AI revenue may be huge, but it now carries real financing risk if demand cools or returns take longer than expected.
Meta Taps the Bond Market to Keep Building
To support its expansion, Meta launched the year’s largest investment-grade corporate bond deal, raising about $30 billion. Investor appetite was enormous, with more than $120 billion in orders for the debt, according to multiple reports. The sale reflects the credit market’s strong faith in tech’s ability to pay back, even as spending surges.
Meta is not alone. Bank of America estimates about $75 billion in AI-linked debt has been issued in just two months. Cheap credit has made it easy for Big Tech to finance growth, but it also increases exposure to higher interest costs if the credit cycle tightens.
Analysts Warn That Cash Flow Is Getting Tight
Analysts at Bank of America (BAC) expect AI capital expenditures for the biggest tech firms to reach nearly 94% of operating cash flow next year, up sharply from 76% in 2024. This leaves little room for dividends or buybacks, forcing boards to choose between rewarding shareholders or funding expansion.
Companies could slow their buybacks or issue equity, but debt remains the preferred option. At the moment, investors are happy to lend. If markets shift or growth slows, that confidence could evaporate fast, leaving even the strongest tech giants scrambling to balance their ambitions with financial reality.
Is META a Good Stock to Buy?
Despite the selloff, Wall Street’s conviction in Meta remains strong. Out of 42 analysts tracked in the past three months, 33 rate the stock a Buy, eight recommend a Hold, and only one says to Sell. The average 12-month META price target sits at $847, implying more than 30% upside from the recent price.
