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Meta to Follow Alphabet's Footsteps? What an Equity Raise Could MeanBy Leo Miller. Posted: 6/15/2026. 
Key Points
- Meta Platforms has struggled to hold gains in its share price as investors weigh its AI outlook, a clear contrast versus Alphabet.
- However, as Alphabet just raised significant capital through share issuance to fund AI, Meta is reportedly considering a similar move.
- There are clear puts and takes for a potential Meta equity raise, including shareholder dilution and the pursuit of AI products.
- Special Report: Musk just raised $75 billion. Guess what he needs to buy.
So far, Meta Platforms (NASDAQ: META) has not fully convinced markets that its artificial intelligence (AI) spending will deliver long-term returns. Meta shares are down more than 15% over the past 52 weeks. That stands in sharp contrast to the sentiment and returns of another key Magnificent Seven name: Alphabet (NASDAQ: GOOGL). Alphabet shares have doubled over the same period, helped by accelerating growth in its cloud segment.
Amid that momentum, Alphabet made a significant announcement. The company said it would raise $84.75 billion through a share issuance program as it looks to further expand its AI capacity. Even with Alphabet’s proven AI strength, investors did not react positively to the news. Recent reports suggest that Meta could follow Alphabet’s lead with its own equity issuance. With that in mind, it is worth examining what an equity raise could mean for the company and its investors. Meta Reportedly Considers Large Equity Raise After Alphabet’s Big AnnouncementAlphabet shares fell 4% on the day it announced the funding move, even as the S&P 500 edged higher. Alphabet’s originally planned $80 billion equity raise represented about 1.8% shareholder dilution. That figure rises only slightly to about 1.9% with the upsized $84.75 billion offering. Overall, that is a relatively modest amount of dilution, but the market’s reaction was still understandable. At the end of the day, the raise means each existing shareholder will own a smaller piece of the company, all else being equal. A few days later, reports surfaced about Meta’s potential equity raise. Those reports say the company is considering a stock offering worth “tens of billions of dollars” to help fund its AI strategy. While that is far from a firm number, it points to a meaningful potential funding round and, by extension, shareholder dilution. Still, the move is anything but certain, and reports note it is “premature” to say Meta has made a final decision. A Potential Meta Equity Raise: More Dilution for Less CashEven so, it is worth considering how much Meta would need to dilute shareholders to raise tens of billions of dollars. The midpoint of Meta’s 2026 CapEx guidance is $135 billion, or about 73% of Alphabet’s midpoint CapEx guidance of $185 billion. Since a potential Meta equity raise would be used to support CapEx, it is reasonable to anchor the size of that raise to 73% of Alphabet’s offering. That would imply an equity raise of roughly $62 billion, or 73% of Alphabet’s $84.75 billion raise. With a market capitalization of nearly $1.45 trillion, a $62 billion equity raise would result in dilution of about 4.3%. In other words, Meta would need to dilute shareholders more than twice as much to raise about $23 billion less than Alphabet. That suggests a potential Meta equity raise could be significantly less favorable to shareholders than Alphabet’s offering. Given that dynamic, Meta shares could fall more sharply than Alphabet’s did if such a raise became reality. Investors comparing the two stocks should keep that in mind. That concern becomes even more important over a longer time horizon. If hyperscaler equity raises become increasingly common, Meta’s relative disadvantage on dilution could compound over time. Equity Raise Positives: Potential Funding Source for AI ProductsOn the other hand, it is worth considering the potential upside of a Meta equity raise. So far, Meta has not introduced a wide range of AI products. Most of its AI compute has focused on improving its advertising business across Facebook, Instagram, and WhatsApp. The company has clearly been successful on that front. In Q1 2026, Meta’s revenue rose 33% year over year, its fastest growth rate since 2021. Even so, investors still want to see more from Meta on the AI product side. Notably, it has been only two months since Meta unveiled Muse Spark, its latest AI model. Muse Spark is significantly more capable than Meta’s earlier LLaMa models, and although it is not a "frontier" model, Meta believes it is competitive. Having a competitive AI model is an important prerequisite to launching AI products that can gain traction. All of this suggests that, with Muse Spark still very new, Meta likely has meaningful AI products in its pipeline. As Meta develops those products, an equity raise could be a legitimate way to finance their growth. In turn, Meta could help ease the concerns that have weighed on its share price by creating new AI revenue streams. Overall, while shareholder dilution is far from ideal, the payoff could be much greater over the long run. Another factor to consider is Meta’s valuation. The stock currently trades at a forward price-to-earnings (P/E) ratio of around 19x. That is very close to its lowest level over the past three years and well below its three-year average of about 23x. . |
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