Meta has just handed Wall Street the bill for artificial intelligence. The Facebook and Instagram owner said on Monday it plans to raise up to $95 billion by selling new shares to pay for the data centres it is racing to build. After jumping nearly 2% when the headline first crossed, Meta shares have slipped about 1% near $636 before the open as investors weigh the dilution, while US futures are edging higher ahead of the busiest week of the autumn.
Where things stand
US stock futures are modestly positive. S&P 500 futures are up about 0.2% near 7,676, Nasdaq 100 futures are up about 0.3% near 29,211 and Dow futures are up about 0.35%. That follows a poor Friday, when the S&P 500 fell 0.5% to 7,624 and the Dow dropped 1.2%.
Europe is in a better mood. The DAX is up nearly 1% after a better-than-expected reading on German business expectations, the CAC 40 is up about 0.8% and the FTSE 100 is up about 0.4% near 10,736. The VIX, Wall Street’s fear gauge, has eased to around 19.2.
What has changed since the morning
Two things. First, Meta’s announcement landed just after 11:00 UK time and has become the story of the session. Second, the bond market has quietly pushed the US 10-year Treasury yield back above 5%, from just under 4.97% at breakfast. The dollar has firmed with it: sterling has slipped to about $1.3347 from $1.3378 earlier, and the dollar is up to around 157.4 yen.
Oil has cooled but is off its lows. Brent crude is down about 1.3% near $115 a barrel, having been down nearly 2% earlier, as President Trump keeps the market guessing on Iran. He said on Monday he would soon decide whether to make a deal or finish it off, which is not the kind of sentence that lets oil traders relax.
Meta asks shareholders to fund the AI race
The plan comes in two parts. Meta is launching roughly $35 billion of offerings now, made up of $22.5 billion of ordinary Class A shares and $12.5 billion of mandatory convertible preferred shares, which turn into ordinary stock at a later date. It then plans a further programme of up to $60 billion, selling new non-voting Class C shares gradually into the market, which it expects to begin in the first quarter of 2027.
The reason is simple arithmetic. Meta expects to spend between $135 billion and $145 billion on capital projects this year, and it has committed to about $825 billion of future spending, mostly on data centres and computing power. Its free cash flow turned negative in the third quarter for the first time in more than a decade, and at the end of September its cash and investments of about $82.5 billion only just exceeded its long-term debt of about $81 billion. Even one of the most profitable companies in the world cannot pay for this race out of its own pocket any more.
Selling new shares dilutes existing shareholders, so a falling share price would be the normal reaction. Two things seem to be cushioning the blow. Nvidia, AMD and Broadcom have said they are interested in buying up to $5 billion of the new stock, which is a vote of confidence from the companies that supply the chips. And investors may simply prefer new equity to piling on more debt with the 10-year yield sitting at 5%.
The wider point matters more than Meta itself. For two years the AI build-out has been paid for from big tech’s spare cash. That cash is running thin, and the bill is now being passed to investors through bonds, private credit and, from today, a very large share sale. If Microsoft and Alphabet on Wednesday and Amazon on Thursday also signal bigger spending, the market will start asking who else needs to raise money.
Stocks moving before the open
Tesla is up about 2.2% near $380 after Barclays upgraded the shares to overweight and lifted its price target to $450 from $370, pointing to growth returning in its car business and progress on self-driving cars. The chipmakers that would buy Meta’s stock are firmer too, with Nvidia up about 1%, Broadcom about 1.2% and Micron about 2%.
Apple is down about 1.5% near $342, as reports pile up of cracked displays and hinge problems on its new foldable iPhone, which went on sale on Friday. Moderna is the weakest large name, down about 8%. With oil lower, Exxon Mobil and Chevron are both down about 1.5%, while airlines are up, with United Airlines and Delta both higher by more than 1%. Lockheed Martin is up about 1.4% after a bullish note from Morgan Stanley.
FX and the dollar
The dollar index is a touch firmer near 101.9. Sterling is down about 0.2% at $1.3347 ahead of Wednesday’s Budget, the euro is slightly lower near $1.1195 and the dollar is up about 0.35% against the yen at around 157.4. A US yield back above 5% gives the dollar a little extra support, and the Bank of Japan meets on Friday, so the yen will be closely watched all week.
Bonds
The US 10-year yield is around 5.00%, up about 1.5 basis points, and the two-year yield is up nearly 3 basis points near 4.71%. The 30-year is around 5.32%. That 5% level on the 10-year matters because it is the return investors can get without taking any stock market risk, and it makes expensive growth shares look less attractive. UK 10-year gilt yields are steady near 5.35%, while German Bund yields are up slightly near 3.37%.
Commodities
Brent is down about 1.3% near $115 and US crude is down nearly 2% near $101. Gold is up about 0.5% near $4,030 an ounce, holding the $4,000 area. US natural gas is down about 4%, though European gas remains near its highest since late 2022, a reminder that the energy squeeze has not gone away. Bitcoin is steady near $80,300 after a weekend dip below $80,000.
Today’s remaining catalysts
Today looks quiet on the US data front and Fed officials are in their quiet period, so Meta’s share sale and headlines on Iran are likely to drive the session. The real tests come later in the week. On Tuesday there are US durable goods orders at 12:30 UK time and consumer confidence at 14:00, along with Israel’s election. On Wednesday the Federal Reserve announces its decision at 18:00 UK time, with markets expecting rates to stay at 3.75% to 4.00%, followed by Microsoft and Alphabet results after the close and the UK Budget earlier in the day. Thursday brings US GDP and PCE inflation, the European Central Bank and results from Amazon and Intel, and the Bank of Japan meets on Friday.
One timing note for UK readers: British clocks went back on Sunday but US clocks do not change until 1 November, so the New York cash open is at 13:30 UK time this week rather than 14:30.
Levels traders are watching
For the S&P 500, Friday’s close near 7,624 is the first reference below, with futures near 7,676 above it. On the Nasdaq 100, futures near 29,200 are the level to hold. Meta’s Friday close near $643 is worth watching: with the shares slipping to around $636 before the open after an early pop, whether they recover $643 once the cash session starts will show how easily the market digests the dilution. In bonds, 5% on the US 10-year is the line everyone is looking at. In commodities, Brent near $115 and gold near $4,000 are the reference points. These are reference points, not targets.
How we see it
The tone into the open is cautiously positive, but it is the calm of a market waiting for a busy week rather than one that has made up its mind. Futures are a little higher, Europe is firmer and the VIX has eased, yet the 10-year yield back above 5% and a firmer dollar are a quiet reminder that money is not cheap.
Meta’s raise is the most interesting signal. The market is happy to fund the AI build-out today, helped by chipmakers buying in and a preference for equity over debt. What would change that view is Meta trading below Friday’s close as the offering is priced, or Microsoft and Alphabet signalling much heavier spending on Wednesday without the revenue to match. A sharp move higher in oil on an Iran decision, or a hawkish tone from the Fed, would also test this calm.
The markets to watch are Meta and the big chipmakers at the open, Nasdaq 100 futures, the US 10-year yield around 5% and Brent near $115. For newer traders, the lesson is that how a company pays for its growth matters as much as the growth itself. When a company sells new shares, each existing share owns a smaller slice of the business, so the money raised needs to earn more than it costs.
If you want to see how your own approach to moves like these stacks up, the Samuel & Co Trading Assessment is a useful next step.
