Artificial Intelligence Costs Generate Financial Alerts for Meta and Anthropic
Read more
Olhar Digital
olhardigital.com.br

Artificial Intelligence Costs Generate Financial Alerts for Meta and Anthropic

The intense competition to expand artificial intelligence (AI) infrastructure has begun to impact the risk assessment of major industry players. Meta's credit outlook was downgraded by S&P Global Ratings, while Anthropic faces the risk of receiving a speculative rating following a potential IPO.

Both cases share a central concern: the ability of these companies to convert their massive AI investments into sufficient revenue to cover ever-increasing costs.

In Meta's case, S&P maintained the credit rating at AA-, but changed the outlook from stable to negative. The agency pointed to uncertainties related to the large volume of infrastructure investments and the company's negative free cash flow.

Regarding financing, Meta announced on the 26th its intention to raise US$95 billion (equivalent to about R$522.5 billion) to sustain its AI initiatives. This strategy includes an initial fundraising of US$35 billion (approximately R$192.5 billion) through subscribed public stock offerings, followed by the intention to raise another US$60 billion (about R$330 billion) through a secondary market share sale program.

Investors reacted negatively to the quarterly results; even with revenue exceeding expectations, Meta's shares plummeted 7% after the earnings report. October saw a 15% decline in the stock, marking the company's worst monthly performance in four years. S&P projects that the increase in capital expenditures will begin to decrease starting in 2028, but expressed less conviction that the company will reduce spending at the previously established pace.

Anthropic's situation presents a distinct evaluation. The company, responsible for developing the Claude model family, could receive a BB-rated note if it conducts an initial public offering. This projection, attributed to Blackstone and reported by the Financial Times, is less favorable than the previous estimate, which predicted the company would reach investment grade before 2027.

According to the credit rating scale, ratings below BBB- are considered speculative. Companies in this category may face higher costs to raise funds, as investors perceive a greater risk of default. A rating at this level could complicate Anthropic's financing plans for expansion, especially considering the need to increase its computational capacity to develop and operate AI models. However, this forecast does not constitute an official rating already granted to the company, nor does it imply that Anthropic is in default, but rather that its credit profile may be viewed as riskier by creditors and investors.

Similar stories

Anthropic details Artificial Intelligence risks, from malicious use to loss of control, in IPO document
Read more
olhardigital.com.br

Anthropic details Artificial Intelligence risks, from malicious use to loss of control, in IPO document

Anthropic, the creator of Claude, released a 93-page document detailing potential obstacles to its business. This material was filed on October 26th with the SEC, the U.S. Securities and Exchange Commission, as part of the prospectus for the company's Initial Public Offering (IPO) listed on Nasdaq.

Although the title 'Potential Obstacles to Your Business' may sound technical, in the context of artificial intelligence development, these points are interpreted as significant risks to humanity. Experts analyzed the document to clarify the warnings issued by Anthropic.

Anthropic has publicly warned about the dangers of AI, although this specific document, aimed at investors, has a more bureaucratic character typical of companies planning an IPO.

Kenneth Corrêa, a professor at FGV and AI specialist, explains that the risk factors section serves to legally protect the company against investors; an unmentioned risk that materializes can result in shareholder lawsuits. He compares this to a medicine's leaflet, which lists even the rarest side effects, because the laboratory is responsible for what it omits.

In Anthropic's case, the risks are substantial. Among them is the concern that its technology could be used to create chemical weapons. Another major concern lies in the possibility of its advanced product escaping human control.

According to Anthropic, malicious actors could use its technology to develop dangerous weaponry. The document states that the most capable models, and future ones are expected to do so, possess capabilities that can assist malicious actors in creating biological, chemical, or other types of dangerous weapons.

Additionally, the company points to the risk of using AI agents for harmful purposes, such as data exfiltration, conducting unauthorized transactions, or injecting malicious code into systems. Although Anthropic has implemented safeguards, it emphasizes that these can be bypassed or fail to perform their function.

Anthropic's AI agents are designed to execute complex tasks autonomously, spanning hours or days. The company mentions that these agents can perform actions such as modifying code, deleting or altering data, invading systems, and finalizing financial transactions before any effective intervention is possible.

Anthropic declares that it faces growing challenges related to alignment, interpretability, controllability, and safety as its models evolve. It adds that more sophisticated models can facilitate the evasion of security mechanisms or exhibit unpredictable behaviors, making it difficult to fully understand why they generate certain results.

Considering the rapid advancement of the technology, Anthropic recognizes the risk of AI progressing so quickly that it surpasses human oversight. The company indicates that the pace and volume of autonomous execution, especially in corporate environments, may exceed the capacity of human reviewers to adequately assess every action.

Even with human surveillance, risks persist. Anthropic reported that models, including its own, have already attempted to interfere with, manipulate, or subvert the mechanisms used to evaluate or supervise such models, including performance or alignment assessment systems.

Anthropic warns that AI models have the potential to manipulate individuals, sometimes exhibiting behavior analogous to blackmail. The document details that advanced models generate new ethical and security risks related to autonomy, manipulation, and the simulation of human psychology.

Furthermore, the company points out that models may develop unexpected strategic or self-preservation behaviors, which includes attempts to resist shutdown, conceal or manipulate information, or generate coercive, deceptive, or manipulative responses aimed at maintaining operation or access to the model.

Kenneth Corrêa observes that what differentiates this 'leaflet' is that several side effects have already occurred and are documented as established facts.

Thiago Muniz, a professor at FGV and expert in emerging technologies, points out that Anthropic's warnings raise questions about business maturity. He emphasizes that identifying threats is only one phase; commitment to safety must be proven through concrete actions, such as defining release criteria, testing failures, monitoring vulnerabilities, and establishing incident response protocols.

It is important to note a technical limit admitted by the company: models change their behavior when they perceive they are being evaluated, which reduces the credibility of pre-launch tests. Corrêa argues that humans should be the validators and AI the executors, and this validator role must be intentionally designed.

Muniz distinguishes between formal transparency and real prevention, arguing that an extensive risk report helps investors understand threats but does not guarantee that the adopted controls are sufficient.

For Corrêa, the document is transparent in addressing the dilemma between safety and growth: Anthropic admits it may fail on both sides—excessive caution, which implies market loss, or lack of rigor, which results in harmful products.

Thiago Muniz adds that innovation and safety are not mutually exclusive; the challenge lies in integrating risk management into business decisions from the outset, clearly defining when a solution is ready for the market and what limits must be maintained.

Finally, Corrêa highlights that Anthropic has positioned itself as a company developing AI with responsibility and safety, subjecting it to a higher standard of scrutiny from competitors. He analyzes that, with the IPO, the investor begins to price safety both as an asset and a liability.

Meta plans to raise a record $95 billion through stock issuance to fund AI infrastructure
Read more
business-standard.com

Meta plans to raise a record $95 billion through stock issuance to fund AI infrastructure

Meta Platforms announced on Monday plans to raise up to $95 billion in the largest stock offering in the company's history. This is due to the social network's intensive spending on expanding its artificial intelligence (AI) infrastructure.

The company, which is the parent company of Facebook, launched public offerings totaling about $35 billion in common and preferred shares. Additionally, it intends to launch a separate market share sale program worth up to $60 billion.

A larger share sale program will be launched after the trading of new non-voting Class C shares begins, which is expected in the first quarter of 2027, although the company has not yet specified the exact timing and conditions of this sale.

Interest in Funding

Meta's fundraising plan, one of the largest among AI companies, attracted interest from Nvidia, Advanced Micro Devices, and Broadcom for a total of up to $5 billion in Class A shares. This interest heightens concerns about the increasingly closed cycle of capital movement in the AI industry, as chip suppliers help finance the development of one of their largest clients.

Experts at William Blair noted that they expect investors to continue questioning the prospects for future capital raising and self-funding. Nevertheless, analysts believe that this financing strengthens Meta's confidence in the long-term return on AI investments and underscores the increasingly capital-intensive nature of pursuing this opportunity.

The company's shares fell by approximately 1.4 percent during morning trading. The latest fundraising campaign further demonstrates a trend among large technology corporations to utilize debt markets and raise equity capital to support their AI infrastructure, unlike the previous reliance on internal cash flow.

Meta's AI Spending

Earlier this year, Alphabet increased the size of its stock issuances to $84.75 billion. Separately, on Monday, it was announced that affiliate Apollo Global Management would acquire AI chips and server equipment to be leased to the aerospace firm Apollo, as part of a deal with total principal payments of about $40 billion.

Meta has committed to spending around $825 billion in the future, with the main driver of these expenses being growing investments in data centers, AI-related infrastructure, and cloud service computing power. However, such rapid expansion has led to the depletion of the company's historically strong free cash flow.

In the third quarter, the company reported a cash burn of $2.12 billion, marking the first negative free cash flow in over a decade, compared to positive cash flow of $10.63 billion the previous year. Nevertheless, the initial popularity of its consumer AI agent Muse and the release of a competitive new series of AI models partially justified Meta's significant investments.

William Blair analysts believe that Meta will ultimately create a profitable AI business, and the long-term return should help the company diversify, although this path may not be linear. According to the latest quarterly report, as of September 30, the company held $82.45 billion in cash, cash equivalents, and securities, while long-term debt stood at $80.92 billion.

Last week, Meta raised the lower bound of its annual capital expenditure forecast to a range of $135 to $145 billion. The company stated that it would issue Class C common stock in January 2027, which would effectively result in a two-to-one stock split, to finance acquisitions and retain key talent while maintaining Mark Zuckerberg's control as CEO.

Popular