Meta has swung from net cash to net debt as AI spending finally overtook its cash flow

Meta Platforms' spending on artificial-intelligence capacity overtook the cash its business generates last quarter, and its balance sheet has changed with it. At the end of 2025 the company held $22.8 billion more in cash and marketable securities than it owed. At the end of the September 2026 quarter it owed $1.2 billion more than it held. In between it stopped buying back its own shares, and its board approved a new class of non-voting stock whose stated purposes start with raising capital.

The spending side is simple. Operating cash flow, the cash the business generates before it invests, has stayed close to $32 billion in each of the last three quarters, after a stronger final quarter of last year. Purchases of property and equipment, the data centres and servers behind Meta's AI models, climbed from $19.0 billion in the first quarter to $33.9 billion in the third. On the company's own measure of free cash flow, which also subtracts payments on finance leases, last quarter came out negative, after a positive result in the same quarter a year earlier.

The swing to net debt, though, is mostly not the build. Over the nine months free cash flow was still a positive $11.05 billion. Among the larger drains were $12.77 billion of taxes Meta paid when it settled employee share awards net of withheld shares and $4.06 billion of dividends. About $9.9 billion more moved into restricted cash, calculated from the release; the quarterly filing says most of it is held in escrow under multi-year infrastructure purchase agreements, to be released only as those purchase obligations are met, and the net-cash measure leaves restricted cash out. The debt was raised in the second quarter, when operating cash flow still covered spending on property and equipment, and it now slightly exceeds cash and marketable securities. Debt barely moved in the third quarter, so that quarter's shortfall came out of cash already held. Buybacks, large in the first nine months of last year, stopped altogether in the same months this year.

None of this makes Meta short of money; the cash pile is large. But the third quarter's operating cash flow probably flatters the picture. The quarter carried a $9.89 billion charge, booked in general and administrative expenses, for the agreement with state attorneys general over teen mental health litigation, and other liabilities on the cash flow statement rose by $7.44 billion. That is consistent with the charge being booked but not yet paid, which is our reading of the cash flow statement rather than a statement by the company. The agreement provides for payments of up to about $18.59 billion.

The heavier spending is still ahead. Meta guided full-year capital expenditures, including finance-lease principal, to $135-145 billion. After nine months of spending, that range implies $49.2-59.2 billion in the fourth quarter, calculated from the reported figures, well above the third quarter. The new stock takes effect only after that quarter.

The Class C stock is the newest tool. It is to be distributed one for one to existing holders, with an effective date of 19 January 2027, and the release says the dividend will not change anyone's voting power. Because the new shares carry no votes, Meta could sell them, or use them for pay and acquisitions, without diluting control. Susan Li, the chief financial officer, said the company had no specific financing plans to announce, and described the move as setting up a capital structure that gives it access to a wider range of funding sources.

How much of next year's build has to be financed depends on a budget the company has not yet set; Ms Li said guidance for next year would come on the fourth-quarter call. At the start of the year Meta had more cash than debt. Now its debt exceeds its cash and securities, and it has approved a share class it could sell.