Meta faces S&P downgrade as 2027 AI capex forecast tops $225bn

Poland is leading an EU effort to penalize Meta (€250M fine) for alleged failures in addressing fraudulent ads, citing systemic issues and insufficient data sharing. Meta claims its measures are effective, but Poland and other EU countries seek stricter enforcement under the Digital Services Act. Meta's response and compliance are under scrutiny, with broader implications for EU tech regulation.

France's National Assembly passed a 5.5 euro cent per gigabyte tax on content providers like Netflix, Google, and Meta, with a 15% or 2% revenue cap. The tax aims to raise about $11.2 billion annually, but its future is uncertain. Netflix, Alphabet, and Meta's stocks showed minor movements unrelated to the vote.

OpenAI reduced its fundraising target to $20B, lowering its valuation to $1.25T. Anthropic, a rival, filed for an IPO, showing positive cash flow. Meta received a credit warning from S&P Global due to negative cash flow and high spending plans, with capex expected to reach $140B this year. Microsoft reported strong cloud growth but increased capital spending. AI chip maker SK Hynix exceeded earnings forecasts.

France's National Assembly voted 11-10 to impose a €0.055 per gigabyte tax on data traffic from companies like Google, Meta, Amazon, Netflix, and Akamai, aiming to raise €10 billion. The tax would be measured by internet providers and capped at 15% of French revenue or 2% of total revenue. The government opposes the measure, and the bill remains in early stages of the budget process.

Meta Platforms' stock fell 12% post-Q3 earnings despite revenue of $64.6B and EPS of $3.83. The drop followed a $135B-$145B capex plan, negative free cash flow of $2.1B, and a new non-voting stock class. Analysts estimate a $95B equity raise, impacting 2027 EPS forecasts. Meta plans to fund AI initiatives with new shares and reallocated investment.

AMD (led by Lisa Su) will invest $1B in Meta's $37.5B equity offering, expanding their partnership to supply AI computing power. AMD's Helios systems are being tested at Meta. Meta's stock sale aims to fund AI projects, with AMD, Nvidia, and Broadcom interested in buying shares. AMD's investment is ~7.6% of its cash reserves. AMD's shares have doubled this year, closing at $560.26 on Oct. 27.