Meta to Issue New Non-Voting Shares to Fund $64B AI Expansion

Meta generated $64 billion in revenue during the third quarter, marking a 26% year-over-year increase, but the company is preparing a significant financial restructuring to support its aggressive artificial intelligence ambitions. On Wednesday, the firm confirmed it will create a new class of non-voting capital stock to help finance its expanding AI operations. This move follows initial reports from Semafor and was officially disclosed during the company’s earnings call.

Susan Li, Meta’s chief financial officer, explained that the new shares will be distributed to all existing shareholders as a stock dividend. The primary objective is to establish a publicly traded instrument that can be used for capital raising, employee compensation, and acquisitions. By issuing shares that do not carry voting rights, Meta aims to preserve the current voting power held by Class A and Class B shareholders, thereby maintaining its founder-led governance structure while expanding its financial toolkit.

Li stated that this strategy provides the flexibility needed to invest in what she described as the unprecedented momentum driven by AI across the business. While the third-quarter earnings beat Wall Street expectations, the company’s costs and expenses rose sharply by 68% compared to the same period last year. This substantial increase in spending reflects the heavy investment required to develop and deploy its latest technology.

The Reality Labs division, which produces augmented reality glasses, virtual reality headsets, and related software, continues to operate at a loss, though the deficit is narrowing. The company expects this division’s annual losses to shrink from 2025 levels to a range between $18 billion and $19 billion. Despite these ongoing losses in the hardware sector, Meta has accelerated its software-focused AI push over the past year.

Recent product releases include the Muse Spark and Muse Glimmer models, followed by the launch of Muse Wonder and the open-weight Muse Spark Open. The company also introduced Muse Code, a coding agent for developers, and debuted a line of avatar options for its Meta Muse AI assistant at the Meta Connect event. These efforts are designed to make the AI services more relatable and accessible to a broader audience.

CEO Mark Zuckerberg reported strong adoption figures for these new tools, noting that more than 10 million people in the U.S. and Canada have set up Muse personal agents in just a month and a half. He added that the product has maintained the number one position in the App Store almost every day. Zuckerberg characterized this period as a new operational phase focused on scaling the product to eventually serve billions of users.

However, the company acknowledged that regulatory and legal challenges remain. Li noted that Meta is closely monitoring active matters that could impact financial results, specifically citing increased scrutiny regarding youth-related issues in several markets. Several trials concerning these matters are scheduled to take place in the United States in the coming months.