Big Tech AI spending surges past $725 billion as Meta, Alphabet and Microsoft raise forecasts

Meta's AI Bet, and the Evolution of Smart Glasses

Meta CEO Mark Zuckerberg used the company's first-quarter earnings call on Wednesday to detail his plans to continue investing in AI, including integrating personal AI agents in Meta's popular smart glasses. Zuckerberg has long championed a future vision of "personal superintelligence," which is the idea that AI will be used for "personal empowerment," as Zuckerberg wrote in a blog post in July 2025. "My view of AI is very different from many others in the industry," Zuckerberg said during the earnings call, and repeated in a Facebook post Wednesday afternoon. "I hear a lot of people out there talk about how AI is going to replace people. Instead, I think that AI is going to amplify people's ability to do what you want, whether that's to improve your health, your learning, your relationships, your ability to achieve your personal career goals, and more." This is not dramatically different from other tech leaders' view of AI, but it does highlight a key difference: AI from companies like Anthropic, Google and even Microsoft is for your work life. Meta -- with social media platforms Facebook, Instagram and Threads -- is for your personal life. That would be fine, except the AI industry has been changing direction this year to focus on building tools for enterprise work and businesses, like Claude Code and Codex. So if Meta is going to primarily focus on the consumer side of AI (though not entirely, since developer tools are important, Zuckerberg acknowledged), there have to be other ways to use Meta AI. That's where products like smart glasses come into play. "All of our glasses are designed to easily update to use our newest AI models and features," Zuckerberg said. "I'm also really excited to see the glasses evolve from being able to answer questions to being able to be a personal agent that's with you all day long, helping you remember things and achieve your goals beyond glasses." Meta's focus on building agents comes as many AI companies are working on building autonomous AI tech. Meta Muse Spark, the company's latest model, is the first major product launch from its frontier AI lab led by Alexandr Wang and proves the company "is on track to build a leading lab," Zuckerberg said. But competitors like Google, OpenAI and Anthropic already have those labs and have been growing their model capabilities and customer bases. The Muse Spark model is the first step toward that future personal agent, the company said. And because it's Meta, which has built its tech empire on e-commerce, shopping will be part of that vision. "I don't hear any other labs out there talking about how they're building an AI that's really good at shopping," Zuckerberg said. Shopping isn't the most important thing, he said, but it's about a difference in philosophy around the purpose of AI. Meta is about "empowering people to do the things that matter in their lives, whether understanding social context or shopping or personal health things, or understanding what's going on around them visually...these are all elements of the personal super intelligence vision." Meta has had a chaotic first quarter of the year: It killed and barely revived its Metaverse app, which the company renamed itself for back in 2021. Its smart glasses sparked major backlash amid concerns that Meta's third-party contractors can view sensitive information, including nudity and bank records. Meta also lost two major lawsuits around child safety, which could result in a "material loss," the company said on the call. Reports of upcoming massive layoffs aren't helping. While Meta beat expectations on revenue, declines in user growth had the company's stock price dropping on Wednesday evening. Meta said internet outages in Iran were partially responsible during the conflict with the US and Israel, along with a ban on WhatsApp in Russia. For 2026, Meta increased its overall capital expenditure forecast to between $125 billion and $145 billion, up from the previous ceiling of $135 billion, which Zuckerberg partially attributed to "higher component costs, particularly memory pricing," referencing the global RAM shortage caused by the high memory needs of AI datacenters. Wall Street investors have had their eyes on Meta's report, as analysts use the financial health of the so-called Magnificent Seven -- the biggest tech companies -- as a litmus test for AI spending and the health of the global economy. Also reporting its earnings on Wednesday afternoon were Amazon, Alphabet and Microsoft.

US Big Tech Ratchets Up AI Spending Past $700 Billion This Year

The biggest US tech firms now plan to spend as much as $725 billion this year on capital expenditures, primarily on AI data center equipment. Alphabet Inc. and Meta Platforms Inc. both raised their full-year guidance for capex, while Microsoft Corp. gave its first estimate for spending through the end of December, matching Alphabet at $190 billion. Amazon.com Inc. was alone among the big four data center developers -- which have come to be referred to as the industry's hyperscalers -- to keep its figures unchanged, at $200 billion, though it reported a surge in spending in the March quarter that whittled down its free cash flow. "We are increasing our infrastructure capex forecast for this year," Meta Chief Executive Officer Mark Zuckerberg said on a call with analysts on Wednesday. The company raised the upper boundary of its planned range of spending to $145 billion. "Most of that is due to higher component costs, particularly memory pricing. But every sign that we're seeing in our own work and across the industry gives us confidence in this investment." The increased spending was bolstered by strong results across the four multitrillion-dollar companies, which met or exceeded expectations across a number of metrics. Still, the market reaction was not uniform, as Amazon and Alphabet delivered more impressive results than Meta, whose spending was also seen as riskier than its peers operating cloud computing services that would allow them to rent out any excess capacity. Read more on the March quarter earnings Meta Shares Plunge on Rising Concerns Over AI Spending Spree Alphabet Sales Beat Estimates on Google Cloud, AI Customers Amazon Reports Higher Spending to Fuel Cloud Unit Sales Microsoft Projects 'Modest' Cloud Acceleration Amid AI Jitters

Google outpaces Big Tech rivals as AI spending plans rise to $725bn

Google outshone its rivals in first-quarter earnings with faster cloud growth as the search giant and its Big Tech peers upped their AI infrastructure spending plans again to $725bn this year. The big four "hyperscalers", which include Amazon, Meta, Microsoft and Google parent Alphabet, are together expecting to spend 77 per cent more in capital expenditures than a record $410bn last year. While investors have expressed scepticism about the huge sums in the past, they broadly welcomed the earnings reports as demand for AI and data centres drove large jumps in revenue and profits -- led by a 63 per cent increase in Google Cloud revenue. "The AI economy is healthy," said Brent Thill, an analyst at Jefferies. Recent increases in revenue suggested the big players can shoulder the vast capex costs, he added. "The bear thesis is garbage." Shares in Alphabet rose 7 per cent in after-market trading, on course to open at a record market value of $4.3tn on Thursday. Amazon rose 3 per cent and Microsoft was flat after gaining 18 per cent in the past month. The mood was darker at Meta, where a drop in users, increase in capex and chief executive Mark Zuckerberg's vague timeline to launch improved AI models sent the stock down 6 per cent in after-hours trading, even as revenues jumped by a third. "Investors continue to be concerned about how Zuckerberg's once capital-light money machine may be morphing into a capital-intensive incinerator," said Dec Mullarkey, managing director of SLC Management. "They are not interested in growth at any cost." In contrast, investors cheered Google as it showed signs of strong AI-driven growth in earnings after facing criticism for allowing OpenAI and Anthropic to more quickly commercialise a technology that its DeepMind lab incubated. Net income surged 81 per cent to $62.6bn and revenue rose 22 per cent to $110bn in the first quarter, beating estimates. Search revenue rose 19 per cent to $60.4bn, while Cloud sales rose $7.7bn from a year ago to $20bn. The results "will help investors gain confidence in the persistent return on investment question", said UBS analyst Stephen Ju. Google gained market share against its rivals in the highly competitive $500bn cloud computing market. But it remains significantly smaller than Amazon and Microsoft. Amazon added $8.3bn in cloud sales for a total of $37.6bn for the quarter, while Microsoft's Azure cloud unit added $7.9bn in revenue, rising to $34.7bn. Melissa Otto, head of Visible Alpha Research at S&P Global, said the results suggested "Google Cloud is starting to take a little market share . . . it could be nipping at their heels". Cloud boss Thomas Kurian, in an interview with the FT last week, attributed Google's progress to a longstanding strategy to build its own custom AI chips, foundation models and products in-house. He argued this gave the company a cost and research advantage over its cloud and AI peers, which have struggled to build their own chips and frontier models. Google on Wednesday claimed a $460bn backlog of contracts to rent data centre space, which helped the market stomach a $5bn rise in its capex guidance to as much as $190bn this year. Chief financial officer Anat Ashkenazi said spending would "significantly increase" again in 2027. Amazon said its contract pipeline had reached $364bn and would expand further due to a recent $100bn computing contract with Anthropic. "There's reasonable breadth in that. It's not just one customer or two customers," CEO Andy Jassy said on a call with investors, adding that a recent deal with OpenAI would unlock more revenue. "There is no one [AI] tool to rule the world. [Customers] want choice." At Microsoft, chief financial officer Amy Hood said more investment was needed in data centres to meet demand. A 40 per cent increase in cloud sales helped push Microsoft's total revenue to a record $82.9bn and net income to $32bn. Microsoft outlined $190bn of capex spending for the 2026 calendar year, ahead of the $152bn average analyst forecast. Hood also warned that rising prices for memory chips and other components were responsible for $25bn of the record capex budget. "Even with these additional investments, and continued efforts to bring GPU, CPU and storage capacity online faster, we expect to remain constrained at least through 2026," she said. Hood added that cloud growth would accelerate in the second half of the year as more data centres come online. Microsoft chief Satya Nadella said that ending its exclusive contract with OpenAI this week would be beneficial. "We now have a frontier model, royalty-free, with all the IP rights [and] access all the way till 2032, and we fully plan to exploit it," Nadella said. Meta also blamed "higher component costs, particularly memory pricing" as well as competition to invest in land, power and skilled workers to build data centres as it added $10bn to its spending plans. It now projects as much as $145bn in capex this year. The news unnerved Wall Street, despite Meta's revenue jumping 33 per cent to $56.3bn in the quarter as it used AI to boost advertising pricing and user engagement. The share price tumble in after-hours trading left Meta poised to shed $113bn in market value when markets open on Thursday. Pressed on the timeline to release a promised series of text, image and video AI models, Zuckerberg said he cared more about "quality" than hitting a deadline. Zuckerberg said: "There's a lot of agents out there that people are building for different things, but there aren't that many that I would want to give to my mother." Data visualisation by Louis Ashworth

Meta lifts capital expenditure forecast, doubling down on AI push

April 29 (Reuters) - Meta Platforms (META.O), opens new tab raised its annual capital expenditure forecast on Wednesday, doubling down on its decision to plow billions into artificial intelligence infrastructure even as it seeks cost savings via planned layoffs. The Facebook-parent now expects 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell around 5% in extended trading. Family daily active people (DAP), a metric Meta uses to track unique users who open any one of its apps in a day, rose 4% from a year earlier to 3.56 billion. The results come weeks after Reuters reported first about Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows ⁠and reshape its workforce around the technology. Meta, which owns Instagram, WhatsApp and Threads, has been spending heavily on AI infrastructure and high compensation for employees such as those working in its Meta Superintelligence Labs, which released its first AI model called Muse Spark earlier this month. The company's robust ad platform, which allows advertisers to automate and personalize their campaigns, has remained its growth engine and has helped support its investments in AI infrastructure. Its Advantage+ ad automation tools are powered by ad-retrieval engine Andromeda, ranking architecture Lattice and generative recommendation model GEM, helping it attract more marketers on the platform even as companies face geopolitical uncertainty due to the Middle East conflict. Meta launched ads on ⁠messaging service WhatsApp and microblogging platform Threads last year, intensifying competition with platforms like Elon Musk's X. Simultaneously, Instagram's Reels continue to jostle with TikTok and YouTube Shorts in the lucrative short-video market. For the first time, Meta is projected to overtake Alphabet as the world's biggest online advertiser, with an expected $243.46 billion in global net ad revenue this year, excluding traffic acquisition ⁠costs. The forecast, by research firm Emarketer, puts the Google- and YouTube-parent's annual ad revenue at $239.54 billion. Last week, the company expanded the availability of Meta AI business assistant, designed to help advertisers optimize campaign performance and resolve technical issues through real-time ⁠guidance. Meta is installing new tracking software on U.S.-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters ⁠reported last week. Meanwhile, China ordered Meta to unwind its $2 billion-plus acquisition of AI startup Manus on Monday, as Beijing tightens scrutiny of U.S. investment in domestic startups developing frontier technologies. Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed Our Standards: The Thomson Reuters Trust Principles., opens new tab

Why investors didn't give Meta a pass on increased spending despite a great quarter

Meta Platforms on Wednesday evening reported a truly impressive first quarter, but the stock sank on the one metric that mattered most to Wall Street. Revenue in the first quarter rose 33% year over year to $56.3 billion, crushing the LSEG-compiled analyst consensus estimate of $55.45 billion. Notably, this was the strongest revenue growth for Meta in 5 years. Adjusted earnings per share increased 62% to $10.44, significantly ahead of the $6.79 expected, according to LSEG. META YTD mountain Meta Platforms YTD Nonetheless, higher capital expenditure guidance knocked Meta shares down roughly 6.5% in after-hours trading. The stock had been making a comeback, but a loss of this magnitude by Thursday's close would knock it back into the red year to date. Bottom line Coming into the print, it was first-quarter spending and spending guidance that had investors on the edge of their seats. Capex in Q1 came in below expectations -- clearly a positive, however, investors want to see where the puck is going, not where it's been. And, unfortunately, chasing the holy grail of technology, artificial intelligence, is going to cost more than previously expected. While reaffirming full-year total expense guidance, it raised the outlook for the capital expenditures part by $10 billion at the midpoint, with much of that increase attributable to higher component costs, particularly the rise in memory costs. That might have been forgivable, considering Meta's strong quarterly revenue, margins, EPS, and operating cash flow that AI investments to date have helped to deliver. But, a 5% quarter-over-quarter slide in daily active people (DAP) in its Family of Apps unit -- which includes Facebook, Instagram, Messenger, and WhatsApp -- was a step too far. Even a nearly 4% year-over-year DAP increase to 3.56 billion was little consolation. On the call, CEO Mark Zuckerberg said, "We saw a small decrease in total family dailies due to internet outages in Iran and blocks in Russia, but otherwise trends across our apps are strong. Daily and monthly actives on Instagram and Facebook continue to grow with video driving all-time high engagement across both apps." CFO Susan Li noted that absent these headwinds, Family DAP would have been higher than the 3.58 billion we saw last quarter. Though we understand the desire by some to sell the stock after hours, we think that is short-sighted. Yes, the increased capex guidance hurts, and the hit to DAPs resulting from the conflicts involving Iran and Russia certainly don't help. However, we think strong user monetization, cash generation, and operating income results serve to justify the outlays. The caveat, and why we think Meta is reacting so much worse than Alphabet, even as both dominate the advertising space and both increased capex guidance, is that of the four mega caps that reported Wednesday night, Meta is the one that lacks a public cloud offering. As a result, Meta's spending is more about internal needs than a desire to build out capacity to then turn around and rent to others. Therefore, because the return on this spend is about Meta's own demand, and not about the demand of everyone else that names like Microsoft, Alphabet, and Amazon can turn around and sell to, the spending gets more heavily scrutinized. If demand from one of Alphabet's customers wanes, it has others that can sop up the capacity. If demand for Meta products wanes, however, it doesn't have the business in place to simply rent out the capacity to other existing customers, for their own non-Meta needs. On the call, Li said, "We're also signing cloud deals that will come online over the course of this year and 2027, allowing us to scale more quickly. These multi-year cloud deals and our infrastructure purchase agreements drove a $107 billion step up in our contractual commitments this quarter. Our investments will support our training needs for future models, and most importantly, provide us with the inference capacity necessary to deliver personal and business agents to billions of people around the world, along with several other AI product experiences we're developing." As a result, we're reiterating our buy-equivalent 1 rating . That said, understanding that investors are clearly taking issue with Meta's levels of spend, a factor that will cap upside until there is more clarity on engagement and revenue opportunities that these massive levels of spend are yielding, we are trimming our price target to $750 from $825. Along with Meta, our three other hyperscalers -- Alphabet , Amazon , and Microsoft -- reported quarterly results Wednesday evening. Commentary Global average price per ad increased 12% year over year, even as strong impression growth, including in lower monetizing regions, held back the growth. The number of daily AI glasses users more than tripled year over year. Other revenue in the Faily of Apps segment (non-advertising) jumped 74% year over year, driven largely by paid messaging and subscriptions revenue for WhatsApp. Ranking improvements made in the first quarter resulted in a 10% increase in Reels time spent on Instagram. Total video time watched on Facebook increased by more than 8% globally, the largest sequential increase in four years. In the U.S. and Canada specifically, the ranking improvements drove a 9% increase in video time watched on Facebook in the first quarter. More than 500 million users across Facebook and Instagram are now watching AI-translated videos every week. Businesses are increasingly leaning on Meta's AI offerings to help with their own customer engagement. In fact, between WhatsApp and Messenger, more than 10 million conversations are being handled by business AIs every week, a 10 times increase versus where we started the year! Why we own it Meta Platforms is dominant in the world of targeted digital advertising with excellent technology. Strong user engagement makes its platforms great places for ads. Meta's scale provides the financial power and attracts the talent needed to pursue growth avenues such as artificial intelligence. Competitors : Alphabet , TikTok, and Snap Weight in portfolio : 4.47% Most recent buy : Nov. 10, 2025 Initiated : May 29, 2014 Guidance Meta projected current (second) quarter revenue of between $58 billion and $61 billion, right in line with the consensus estimate, at the midpoint, according to LSEG. For full-year 2026, the team reiterated guidance for total expenses to be between $162 billion and $169 billion, still materially above the $160 billion analyst estimate. Capital expenditures for the full year are now expected to be between $125 billion and $145 billion, an increase from the prior range of between $115 billion and $135 billions, and above the $122.64 billion expected, even on the low end, according to FactSet. (Jim Cramer's Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Meta Raises Outlook for Capital Spending in 2026; Shares Slide

Meta Platforms Inc. raised its spending outlook for the year, extending its streak of plowing historic levels of investment into the race to build ever-advancing artificial intelligence systems. The social-media giant projected full-year capital expenditures between $125 billion and $145 billion, far exceeding analysts' estimates and marking a roughly 7.4% increase from what the company had previously projected. The company is facing "higher component pricing" this year and additional data center costs, Chief Financial Officer Susan Li said in a statementBloomberg Terminal. Meta Chief Executive Officer Mark Zuckerberg had already signaled that his company will spend hundreds of billions of dollars on AI infrastructure before the end of the decade. And that was before a memory chip shortage triggered a surge in prices. The firm has announced billion-dollar deals with Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc. for chips and other hardware and is building several massive data centers to power its efforts. Meta shares fell 6% in after-hours trading. They had risen 1.4% this year through Wednesday's close in New York. The company also reported first-quarter net income of $26.8 billion, which included a one-time, non-cash income tax benefit of $8 billion due to the implementation of the US tax policy signed into law in July. Analysts had estimated non-adjusted net income of $17.2 billion, without anticipating the adjustment.

Meta Could Spend $145 Billion This Year Due to AI

Wednesday was a big day for the tech industry with Meta, Google, Amazon and Microsoft all reporting earnings at the same time in the afternoon. Out of the four, though, Meta was the clear loser with its shares down more than 7% even though revenue increased 33% this past quarter, the company's fastest since 2021. It's probably because the company upped its already outrageous spending expectations for the year. Meta said that 2026 capital expenditures would be at least $10 billion more than expected and could top $145 billion. While emphasizing his "confidence in this investment," CEO Mark Zuckerberg said that most of this increase was due to "higher component costs, particularly memory pricing." The AI boom has led to an unprecedented data center buildout that has constrained the global memory chip supply and increased prices for these valuable chips. The result has been a global memory crisis that has impacted not only Meta and the rest of the AI industry but also caused the prices of consumer electronics like laptops and smartphones to soar. Meta's $145 billion is a dramatic increase from the $72 billion capital expenditure it recorded just last year, and Zuckerberg is betting it all on an AI turnaround effort. Meta has been left behind in the AI race as industry rivals like Google have soared past. Roughly 10 months ago, Zuckerberg acknowledged the situation and announced a major catch-up effort that saw him commit billions upon billions of dollars to research and development, and to poach talent from all over the industry, including bringing in Scale AI's founder Alexandr Wang to lead the new Meta Superintelligence Labs AI division. Many have been reasonably nervous about this commitment, considering that the company's latest big bet in emerging tech, the Metaverse, has flopped dramatically. In Wednesday's earnings report, Meta said that the Reality Labs division, which had helmed the Metaverse efforts, notched an operating loss of more than $4 billion, while only cashing in $402 million in sales. That adds to the whopping $80 billion and more the division has lost in the past six years. But experts are somewhat more hopeful about the AI bet because, earlier this month, the tech giant debuted the first fruits of that investment with the AI model Muse Spark, a proprietary model that the company plans to open-source in the future. It's a step in the right direction, but Meta still has to do more before it can confidently say the catch-up effort is successful. "This was the first release from Meta Superintelligence Labs, and it shows that our work is on track to build a leading lab," Zuckerberg assured investors in the company's earnings call. "Now that we have a strong model, we can develop more novel products as well." Those novel products will include two agents, one for personal and the other for business uses, according to Zuckerberg. "We're already testing an early version of business AIs and weekly conversations have grown 10x since the start of this year," Zuckerberg said. One way that AI is clearly showing up to benefit Meta is internally. Meta CFO Susan Li said that over half a billion users weekly on Facebook and Instagram each are now watching videos translated and dubbed by AI. The company is also incorporating the new AI model into parts of its core business, like ads, and particularly into its recommendation system. The goal is to have the AI hyper-personalize feeds for users. "Since our recommendation systems are operating at such large scale, we'll phase in this new research and technology over time," Zuckerberg said. "But the trend over the last few years seems clear that we are seeing an increasing return on the amount that we can improve engagement for people and value for advertisers." AI is also taking over internally at Meta. The company is laying off 10% of its workforce and reportedly offering voluntary buyouts to 7% of its U.S. staff, in what seems to follow a purportedly AI-driven trend that has taken Silicon Valley by storm. On the call, executives wouldn't say if the layoffs had to do with automation of jobs, but Li did say that a "leaner operating model" would help "offset the substantial investments we're making."

Meta wants to spend more even after it lost $80 billion on the Metaverse and over 20 million users | Fortune

Despite strong first quarter results, Meta's stock plummeted nearly 9% Thursday thanks in part to a 20-million user drop and a massive spike in AI spending even as it continues to pour billions into its metaverse and virtual reality division, Reality Labs. The company, which reported its first quarter results Wednesday afternoon, exceeded analyst expectations on both net income and revenue, which stood at $26.8 billion (partly boosted by a one-time $8 billion tax benefit) and $56.3 billion, respectively, according to a filing with the Securities and Exchange Commission. Meta also saw a 33% revenue increase compared to the same quarter last year, its biggest year-over-year increase in five years. Yet, investors apparently paid more attention to the bad news. The company recorded 20 million fewer global users for its family of apps in the first quarter compared to the previous three months, a setback that Meta's chief financial officer, Susan Li, blamed on "internet disruptions in Iran, as well as a restriction on access to WhatsApp in Russia." Still, Li said the company recorded more than 3.5 billion daily active users across its app portfolio, which includes Facebook, Instagram, and Whatsapp, and that without the disruptions in Iran and Russia, daily active users for its family of apps would have been positive quarter over quarter. Meta has not yet responded to Fortune's request for comment. Maybe the bigger problem, though, was the company's expected capital spending, much of which is due to the company's increasing focus on AI, which jumped by almost $10 billion to between $125 billion and $145 billion. Li said on Wednesday's earnings call that the new predicted expenditures were necessary because "we have continued to underestimate our compute needs even as we have been ramping capacity significantly, as the advances in AI have continued and our teams continue to identify compelling new projects and initiatives." Notably for Meta, the company also reported Wednesday that it has continued to pour billions of dollars into the metaverse. In the first quarter, the company's metaverse and virtual reality division, Reality Labs, reported an operating loss of $4.03 billion, even as the company has been laying off employees across multiple rounds in 2026, including a 10% cut to Reality Labs' roughly 15,000 person workforce. Meta said earlier this month it would lay off 10% of its overall workforce, or about 8,000 employees. The company has lost approximately $80 billion on its Reality labs since it started breaking out its results in late 2020. While Meta's stock sank, Alphabet's stock hit an all-time-high Thursday and closed up more than 9% while it also raised its capital expenditure expectations. The company said it now expected to spend between $180 billion and $190 billion, up from its last estimate of between $175 and $185 billion. Matt Britzman, an analyst with U.K.-based investment platform Hargreaves Lansdown, wrote in a Thursday note that investors were more mixed than previously on AI spending. "The market was less united on what to make of the spending plans, with investors still trying to balance the scale of the AI opportunity against the cash required to chase it," he wrote. As for Meta, Britzman said while investors are focusing on costs they may miss the company's strong fundamentals, including its advertising momentum and AI advances that improve monetization. "Meta still looks like one of the clearest examples of heavy investment translating into returns for its core business," he wrote.

Meta chief Zuckerberg doubles down on AI spending

San Francisco (United States) (AFP) - Meta chief Mark Zuckerberg on Wednesday defended massive spending on artificial intelligence that dragged down shares despite strong earnings boosted by the technology. The social networking colossus raised its capital expenditures for this year to a range of $125 billion to $145 billion without laying out exactly how that investment would translate into profit. "The way to think about the investment is that we're making a bet (on) the individual things that people care about, and that people are going to be more important in the future," Meta chief Mark Zuckerberg said during an earnings call, as analysts pressed him about the company's heavy spending on AI. He gave the example of a hot trend in "agentic" AI in which digital assistants handle computer tasks independently at the behest of people. "There are a lot of agents out there that people are building for different things, and there aren't that many that I would want to give to my mother," Zuckerberg said. "I think getting to that quality bar is something that I care about more than hitting a specific week for launching (a new product) or something like that." Zuckerberg spotlighted a new Muse Spark AI model built by Meta's nascent "Superintelligence Lab", saying its technology will be put to work in Meta's offerings such as smartglasses and its advertising system. "We are trying novel things," Zuckerberg said. The AI investment from the company that owns Instagram and Facebook is not directly tied to a revenue stream as with Amazon, Microsoft and Google, which sell their AI-powered cloud services to clients worldwide. Meta sent tremors on Wall Street by announcing in its earnings release that expenses at the tech giant notched up to $33.4 billion as it chases "superintelligence" through major infrastructure buys, and went on a hiring spree for top AI talent. Shares dropped more than 6 percent even though the company topped forecasts with a profit of $26.8 billion on revenue of $56.3 billion in the quarter. Headwinds and scrutiny Adding to investor unease about Meta, chief financial officer Susan Li told analysts Meta continues to monitor legal and regulatory "headwinds" in the US and Europe, including social media addiction lawsuits. "We continue to see scrutiny on youth related issues and have additional trials scheduled for this year in the US, which may ultimately result in a material loss," Li warned. A Los Angeles jury in March found Meta and YouTube liable for harming a young woman because of an addictive design of their social media platforms, ordering the companies to pay millions of dollars in damages. The verdict hands plaintiffs in more than a thousand similar pending cases significant leverage -- and signals to the tech industry that juries are prepared to hold social media companies accountable for the mental health toll of their design choices.

Meta, Microsoft, Amazon and Alphabet post positives quarterlies

Meta and Alphabet are bumping up capex by billions as the AI race shows no signs of slowing down. Earlier this year, Meta, Amazon, Google and Microsoft collectively announced a massive $650bn capital expenditure package as they ramped up their AI and cloud spending, sending investors into a frenzy and driving share prices down as a result. These massive investments were expected to cause $900bn in collective damages to Amazon, Google and Microsoft's market capitalisation. Surprisingly, AI-related capital expenditure are showing no signs of slowing down, with Big Tech giants Meta and Alphabet collectively announcing a capex bump of about $15bn. Alphabet drives capex up $5bn Google's parent company Alphabet beat revenue expectations this past quarter, led by its growing cloud business which rose 63pc to hit $20bn. Consolidated revenue grew 22pc to nearly $110bn. Success in the cloud business is attributed to a rise in Google Cloud Platform (GCP) across enterprise AI Solutions, and enterprise AI Infrastructure, as well as the core GCP services. Shares are up more than 6pc in after-hours trading. Alphabet is adding an estimated $5bn extra to its 2026 capex, taking it to around $180bn to $190bn for the year - up from the $175bn to $185bn it previously announced. It reported $37.5bn in capex during this quarter, spending which includes real estate, servers and data centres. Gemini Enterprise grew its paid monthly active users by 40pc from the previous quarter. This was their strongest quarter ever on record driven by the Gemini App, CEO Sundar Pichai said in a press release. Its home-grown series of AI models under the Gemini wing is processing more than 16bn tokens per minute via direct API use - up a staggering 60pc from the previous quarter. Last week, the company made a series of new enterprise-focused launches, including a new platform to build and manage AI agents and the latest generation of its AI-specific Tensor Processing Units. Google also committed up to $40bn to Anthropic this past week, as the AI giant attempts to overtake OpenAI in enterprise users. Meta pumps AI spending after mass layoffs Meta, meanwhile, projected a full-year capex of between $125bn to $145bn - up around 7.5pc from its previous estimated range of $115bn to $135bn. Quarterly capex reached nearly $20bn. Meta said that the expanded budget is expected to help support the company as it navigates higher component pricing this year, as well as additional data centre costs. The pumped up capex comes just after the company announced that it is laying off about 10pc of its headcount, coming to around 8,000 employees. Current headcount stands at 77,986 as of 31 March, with the number expected to go down as the upcoming layoffs materialise in late May. Quarterly revenue at the Facebook-parent is up 35pc to more than $33bn, while second quarter revenue is expected to be in the range of $58bn to $61bn, Meta said. Shares are down more than 8pc in after-hours trading following the results. CEO Mark Zuckerberg said that the "milestone quarter" reflects momentum across its apps, as well as the launch of its first model under the Alexandr Wang-led Superintelligence Labs. "Our biggest milestone so far this year has been the release of our Muse family of models and our first model, Muse Spark, along with a significantly upgraded new version of Meta AI." Microsoft loses OpenAI tech exclusivity In a major blow to the company, a revised deal has revoked Microsoft's exclusive access to OpenAI's tech. OpenAI, meanwhile, immediately jumped to announce exclusive AI products with Microsoft's cloud rival, Amazon. Chairperson and CEO Satya Nadella, however, noted that Microsoft still has much to gain from OpenAI, namely the 27pc equity stake it has in the AI giant. Microsoft shares are down more than 5pc in pre-market trading. "They're a large customer of ours, not just on the AI accelerator side, but also on all the other compute sides. And so we want to serve them well. And then, of course, we have our equity," he said. Revenue at the company is up 18pc this past quarter to around $83bn, with cloud revenue accounting for around $54.5bn - marking a sectoral growth of 29pc. Annual revenue run rate is up 123pc at $37bn. "We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era," Nadella said. Fastest AWS growth since Q2 2022 Amazon Web Services (AWS) is growing at an exponential rate thanks to the massive cloud requirements stemming from the AI wave. AWS revenue is up 28pc to more than $37.5bn, its fastest in 15 quarters - or nearly four years - with its chip businesses topping a $20bn annual revenue rate. Other major achievements this past quarter include a 2 GW deal with OpenAI for its Trainium capacity through AWS, as well as a 5 GW deal for the same from Anthropic. The company is also investing $25bn into Anthropic. The company also announced a collaboration with up and coming Nvidia rival Cerebras, a deal with Uber for its Graviton and Trainium chips, as well as a deal with Meta to deploy tens of millions of AWS Graviton cores for its AI workflow. Shares at the company are up around 1.5pc in pre-market trading. Much like Meta, Amazon is also offsetting some of its AI expenses with massive layoffs at the company. In January, it cut about 16,000 jobs, which followed about 14,000 job cuts last October. Around 450 Irish jobs are understood to have been affected in this move. Don't miss out on the knowledge you need to succeed. 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Meta is spending up to $145 billion this year on AI. When asked about signs of ROI, Zuckerberg said 'that's a very technical question' | Fortune

Meta Platforms is splashing some serious cash on AI infrastructure, and investors have flinched. The company reported first quarter 2026 earnings results on Wednesday and raised its full-year 2026 capital expenditure guidance to $125 billion to $145 billion, up from a previous range of $115 billion to $135 billion. Meta told investors the boost was the result of higher prices for components and "additional data center costs to support future-year capacity." Last year, Meta spent $72.2 billion on capex, up roughly $30 billion from the year before. The company is now guiding to nearly double what it spent in 2025, and more than it spent in 2025 and 2024 combined. In after-hours trading, the stock tumbled more than 6% as a result of the jump in capex guidance. In contrast, Alphabet and Amazon -- which are also spending enormous sums on AI infrastructure buildout, and which both announced earnings on Wednesday -- saw their share prices rise after hours, in part because they both reported AI-related growth in their massive cloud-services businesses. Zuckerberg pointed to "memory pricing" as a driver of the higher costs and he attempted to soothe investors by explaining how he expects the spending plan to pan out. "Every sign that we're seeing in our own work and across the industry gives us confidence in this investment," said Zuckerberg. "That said, we are very focused on increasing the efficiency of our investments, and as part of that, we are rolling out more than one gigawatt of our own custom silicon that we're developing with Broadcom as well as significant amount of AMD chips to complement the new Nvidia systems we're rolling out as well." Zuckerberg was asked during the call to explain any signposts or key factors he is watching to ensure Meta is "on the right path" to generating a healthy return on the investment over the next 12 to 24 months in Meta AI, new advancements or to its core algorithm. "That's a very technical question," Zuckerberg responded. "The things that we're watching are to make sure that we're on track to building leading models and leading products. The formula for our company has always been to build experiences that can get to billions of people and focus on monetizing them once you get to scale." He added that he doesn't think Meta has "a very precise plan for exactly how each product is going to scale month over month, or anything like that, but I think we have a sense of the shape of where these things need to be." "I'm quite comfortable that the lab we're building is on track to be a leading lab in the world," said Zuckerberg. Meta reported Q1 revenues of $56.3 billion, up 33% from the same period a year ago. Operating income rose 30% to $22.9 billion, and profits grew 61% to $26.8 billion. The company noted that profits got a boost from an $8 billion tax benefit in the first quarter, which helped offset a $15.9 billion tax charge in the third quarter of 2025 when the One Big Beautiful Bill Act took effect. Total expenses in the first quarter ballooned 35% to $33.4 billion, driven mostly by infrastructure costs and employee compensation, said chief financial officer Susan Li. Meta doled out a series of stock option grants to Li and other executives targeting a $9.46 trillion market capitalization, a feat no company has ever achieved. "The growth in infrastructure costs was due to higher depreciation data center operating costs and third-party cloud spend," said Li. "The growth in employee compensation was driven by technical hires we've added over the past year, particularly AI talent." Li also noted the company shared internally that it would "reduce the size" of Meta's employee base in May. The company reportedly plans to slash hundreds of jobs in the U.S. and abroad among teams including sales, recruiting, and on its hardware unit. Meta, like other major tech firms, has been pouring money into data centers and servers to train its AI models, which it views as essential to its core advertising business and longer-term investments in personal AI agents for business, health, and entrepreneurship. Zuckerberg has said the investments will strengthen the ad business by making recommendations more relevant and improving the way ads are targeted to increase the time consumers spend on its platforms including Instagram, WhatsApp, and Facebook. On the earnings call, Zuckerberg said its new AI models will help the company evolve beyond looking at statistical patterns showing the types of people engaging with content. "For the first time in Meta's history, we're going to be able to develop a first-principles understanding of what you care about and what each piece of content in our system is about," he said. "So that way, we can show you more useful things for what you're trying to accomplish and we'll also be able to create personalized content specifically for people to help you achieve your goals as well." Melissa Otto, head of Visible Alpha Research at S&P Global, said the downturn in the stock price after hours was a clear reaction to the increase in capex guidance. It was already "pretty high" said Otto, and the company had a good quarter, "but it wasn't a blowout." "It raises this question about what is the real ROI on all this capex that they're spending," said Otto. "I think the investment community is getting a little frustrated at the amount of cash they're burning." Otto said investors are on the lookout for information about how Meta's investment in AI infrastructure is contributing to top-line and efficiency gains. During his remarks, Zuckerberg said the Superintelligence AI lab released "significantly upgraded" version of Meta AI, which was its first. "Over the past 10 months, we have built the strongest research team in the industry and established the scientific and technical foundations to scale very advanced models," said Zuckerberg. "Now that we have a strong model, we can develop more novel products as well."

Meta Is Growing Faster Than It Has in Years. Why Is Its Stock Plummeting?

Get personalized, AI-powered answers built on 27+ years of trusted expertise. Meta is upping its AI investments. Wall Street's not sure how that will pay off. Social media giant Meta (META) on Wednesday raised its 2026 capital expenditures forecast to between $125 billion and $145 billion, a $10 billion increase from the forecast given just three months ago. Meta attributed the step-up in spending to "higher component pricing this year and, to a lesser extent, additional data center costs to support future year capacity." It also reported quarterly results that beat the Street's revenue and profit expectations. But investors blanched -- even as they rewarded other big companies for similar moves. Meta stock was down more than 9% in recent trading, putting shares about 8% below where they started the year. Alphabet (GOOG) also upped its AI budget on Wednesday, and its shares jumped more than 7% Thursday. So what gives? Unlike fellow hyperscalers like Alphabet, Amazon, and Microsoft, Meta doesn't have a booming cloud computing business to showcase the pay-off of its AI investments. Bank of America analysts in a note on Thursday said the returns on Meta's AI investments "are less clear vs Cloud providers." Mizuho analysts said Meta's path to monetizing its frontier AI models "remains unclear." How Meta will factor into the roll-out of AI agents was also a question mark weighing on sentiment Thursday. "It remains vague, but we can see [CEO Mark Zuckerberg's] agentic consumer focused vision start to take shape," wrote Mizuho analysts. Investors are likely looking for more than a "vague" plan from a company spending more than $100 billion a year on a new, rapidly changing business. Granted, analysts saw lots to like in Meta's report -- and see AI as part of the reason for that. Revenue grew 33%, its fastest pace since 2021. A 19% increase in ad impressions and 12% increase in price per impression suggest Meta is keeping users on its platforms for longer and serving them more relevant, valuable ads. Mizuho analysts attributed the "eye-popping" increase in user engagement to improvements in its recommendation algorithm, and called Thursday's sell-off "overdone." "Results reinforce that AI-driven benefits for the core ad business remain intact and should scale with LLM model improvements," wrote Bank of America analysts. "We believe Meta's AI investments will continue to drive positive returns, justifying its capital allocation," wrote HSBC analysts on Thursday.

Meta falls behind as Alphabet, Amazon outpace Facebook-parent in AI shift during earnings

Tech giants, including Google-parent Alphabet, Amazon, Microsoft, and Meta, announced their quarterly earnings on Wednesday, with the Facebook and Instagram-parent appearing to fall behind in terms of AI boost. Tech giants, including Google-parent Alphabet, Amazon, Microsoft, and Meta, announced their quarterly earnings on Wednesday, with the Facebook and Instagram-parent appearing to fall behind in terms of AI boost. Alphabet shares jumped more than 7% in the after-trading hours of Wednesday as investors cheered its positive performance and AI spending. Meta shares, meanwhile, crashed 7% in the same period. The Google-parent's total revenue rose 22% to $109.9 billion in the first quarter, well above an estimate of $107.2 billion, according to LSEG data cited by Reuters. Revenue at Google Cloud grew 63% to $20 billion in the first quarter ended March, highlighting how AI is emerging as a decisive growth engine for Google after years of trailing larger rivals. The cloud backlog crossed $460 billion, showing long-term enterprise demand. The results highlighted how AI integration across services is expanding revenue streams while the company continues investing heavily in infrastructure and computing capacity. During an investor call, Alphabet executives said that there were plans to "significantly increase" spending on AI next year, BBC reported. While the Sundar Pichai-led company didn't mention exactly how much it will spend next year, this year it plans to spend $185 billion, which is more than double what it spent in 2025. "Our enterprise AI solutions have become our primary growth driver for cloud for the first time," CEO Sundar Pichai said on a conference call with analysts, noting that sales on those products grew eightfold from a year ago. Microsoft on Wednesday meanwhile said that sales at its Azure cloud business would beat Wall Street estimates, while unveiling plans for 2026 capital spending of $190 billion, surpassing expectations. Microsoft now expects to spend $190 billion this calendar year. According to data from Visible Alpha, as quoted by Reuters, this far exceeds analyst forecasts for spending of more than $150 billion. Microsoft's Chief Financial Officer Amy Hood during a conference call with analysts said that $25 billion of the spending was because of rising costs of components such as chips. "We remain confident in the return on these investments given higher demand signals and increasing product usage," Hood said during the call. Users of the $30 per month M365 Copilot AI assistant rose to 20 million from 15 million disclosed in January, said Jonathan Neilson, Microsoft's vice president of investor relations. However, concerns around only a small portion of Microsoft Office users paying for the company's Copilot AI tools, still remains high. On the other hand, Amazon said that its revenue from cloud division grew 28% from a year earlier, marking the fastest growth rate since the second quarter of 2022. Net sales increased 17% to $181.5 billion in the first quarter, compared with $155.7 billion in the year-ago period. The shares of the company surged nearly 3% in the after trading hours after Bloomberg News reported that Anthropic was considering a fresh funding round at a valuation of more than $900 billion. Meta meanwhile failed to meet expectations. Its shares crashed 7% in the after trading hours as the Instagram-parent boosted full-year capital expenditures to $145 billion, partly driven by rising component prices. Meta's revenue grew 33% YoY to more than $56 billion in the first quarter. Compared with the biggest AI peers, "Meta's standalone app hasn't had the amount of engagement," Bloomberg quoted analyst Mandeep Singh as saying. "Meta doesn't have "a very precise plan" for how each AI product will be cultivated, he said on a conference call. "I think we have a sense of the shape of where things need to be," Meta CEO Mark Zuckerberg said, while conceding that his answers might be "unfulfilling". "With the potential payoff of AI leadership seemingly so high, the companies continue to make those bets, forcing investors and customers alike to assess how their interests are impacted," Forrester Research Inc. analyst Lee Sustar said in a note, as quoted by Bloomberg. (With inputs from agencies) (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Meta AI 'Justifies Higher Capex', But 'Visibility' Concerns Remain - Meta Platforms (NASDAQ:META)

Meta's AI Is 'Justifying Higher Capex' -- Yet Amazon Gets The Benefit Of The Doubt That gap is where the story is. The Case For Meta: AI Is Already Paying Off Rosenblatt analyst Barton Crockett is blunt: Meta's AI spend is "justifying higher capex." The data backs that up. Revenue grew 33% year-over-year to $56.3 billion, with AI helping drive engagement, ad impressions, and pricing. Importantly, that growth is arriving at roughly 60% EBITDA margins, pointing to what Crockett calls a "healthy ROIC" on those investments. That's where the comparison gets uncomfortable. In simple terms: Meta's AI is working. The market just isn't fully buying it. The Case Against: Investors Still Want Proof That skepticism shows up clearly in Goldman Sachs' take. Analyst Eric Sheridan acknowledges that Meta's core business is "outgrowing the industry." Ad revenue is accelerating, engagement is improving, and AI is clearly driving better outcomes across the platform -- from content recommendations to ad conversion. But that's not the issue. The issue is visibility. Sheridan points out that investors are still looking for clearer evidence of how Meta's AI investments translate into durable, long-term returns. In other words, the growth is there, but the line of sight into the payoff isn't. And that matters more now than it did a year ago. Execution Vs Perception Put the two views together, and a single thesis emerges: Meta is executing -- but the narrative hasn't caught up. AI is already lifting the business. It's improving engagement, monetization, and growth rates beyond pre-AI levels. But unlike cloud at Amazon or Microsoft, where revenue linkage is more direct, Meta's AI payoff is spread across multiple surfaces -- and harder to model. That makes investors cautious. Because in this phase of the AI cycle, it's no longer enough to spend -- or even to grow. The returns need to be visible. Until they are, Meta may continue to face a paradox: delivering results strong enough to justify its capex -- while still having to prove that they matter. Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Explained: Why Meta shares crashed 7% in extended trading amid AI spending spree

Shares of Meta Platforms Inc. came under pressure on Wednesday, plunging as much as 7% in extended trade, as investors reacted to concerns around the scale of spending by major US tech firms on artificial intelligence. The company said it plans to increase investments in AI beyond earlier expectations. Meta, which owns Facebook and Instagram, indicated it would commit billions more to AI projects. The decline followed the company's announcement that capital expenditure could rise to as much as $145bn, up from a previously guided maximum of $135bn. This metric reflects spending on projects that have yet to translate into business growth. Chief Financial Officer Susan Li said the company had underestimated its computing needs in prior years and now needs to step up spending to meet demand. When asked about the returns from such investments, CEO Mark Zuckerberg acknowledged there is no precise roadmap for how each AI-driven product will scale. He said the company has a broad sense of direction and remains confident that its Superintelligence Lab will emerge as a leading global research hub. Zuckerberg also pointed to the growing impact of AI on the company's workforce, suggesting it could significantly reshape hiring needs. He noted that small teams can now build in a week what earlier required months of work by much larger groups. On potential layoffs, Li said the company does not yet know what its optimal workforce size will be. Meta is also dealing with rising regulatory and legal challenges. These include increasing restrictions on teenage use of social media in several countries and a wave of lawsuits from individuals, municipalities, states and school districts alleging that its platforms are designed in a way that harms children. Several major legal cases are scheduled in the coming months, including the second phase of a key trial in New Mexico and a case in California that could influence nearly 2,000 similar lawsuits filed by US school districts. On the user front, Meta reported its first quarterly decline in Daily Active People since it began tracking the metric. The company attributed this to internet disruptions in Iran and restrictions on access to WhatsApp in Russia. Despite this, daily active users rose 4% year-on-year in the first quarter to 3.56 billion. The results come weeks after Reuters reported that Meta is planning large-scale layoffs as Zuckerberg pushes to integrate AI more deeply across the company and restructure its workforce accordingly. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Meta Crushes Wall Street Expectations But Warns of "Scrutiny On Youth-Related Issues"

Barry Diller Reveals Layoffs, C-Suite Shake Up and Name Change for IAC Meta Platforms Inc., the owner of Facebook and Instagram, crushed Wall Street expectations Wednesday, though its transition to become an AI company remains an expensive one, and legal threats around social media addiction and other issues pose potential risks. "We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs," said Mark Zuckerberg, Meta founder and CEO in a statement. "We're on track to deliver personal superintelligence to billions of people." Meta had revenue of $56.3 billion in Q1, up 33 percent from the same quarter a year ago. Income from operations rose by 30 percent to $22.9 billion, with net income soaring by 61 percent to $26.8 billion. But with Meta, all eyes are on the future. The company has spent a fortune to build out an AI lab, and earlier this month told employees about a plan to lay off around 10 percent of its employee base to shift resources toward new investments. The company said Wednesday that its full-year expense guidance remains unchanged at $162 billion-$169 billion, with AI being the main driver of that. And then there are the legal issues, with a number of social media addiction and youth safety lawsuits still inding their way through the court system. Meta warns that legal and regulatory matters "could significantly impact our business and financial results." "For example, we continue to see scrutiny on youth-related issues and have additional trials scheduled for this year in the U.S., which may ultimately result in a material loss," it adds. Daily Active People, which represents those using its family of apps, was 3.56 billion on average for March 2026, an increase of 4 percent year-over-year. Ad impressions were up 19 percent year-over-year, with the price per ad rising by 12 percent year over year.

Meta's AI Is Delivering but Comes With a Hefty Price Tag | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Meta is now leaning on larger, more advanced artificial intelligence systems to decide what users see and when. These systems ingest longer user histories and interpret richer signals across video, text and interactions. They make predictions in real time. In place of narrower ranking models, Meta is deploying LLM-scale architectures that process longer interaction histories and more detailed content signals. The results are showing up across both sides of the business. Engagement is higher. Ad conversion rates are higher, according to first quarter earnings. Meta's recommendation systems now train on longer records of what each user watches, clicks and skips. The result: Same-day posts represent more than 30% of recommended reels on Facebook and Instagram, more than double the share from a year ago. Total video time on Facebook grew more than 8% globally in Q1, the largest quarterly gain in four years from the first quarter earnings call. The same logic applies to ads. Meta built a system that identifies which ad requests are most likely to convert, then routes those to more powerful models at the moment of serving. In Q1, that approach drove a 1.6% increase in conversion rates for off-site campaigns. A separate improvement to landing page view ads drove more than a 6% increase in conversion rates. "We're going to be able to develop a first principles understanding of what you care about and what each piece of content in our system is about," CEO Mark Zuckerberg said on the earnings calls. "So that way we can show you more useful things for what you're trying to accomplish." More than 8 million advertisers now use at least one of Meta's AI creative tools. Those using the video generation tool saw more than 3% higher conversion rates in tests. The Meta AI Business Assistant, rolled out to all eligible advertisers, is resolving common account issues at a 20% higher rate than before. Meta's business AI, available on WhatsApp and Messenger, handled 10 million conversations per week in Q1, up from 1 million at the start of the year. The company is expanding to more countries in Q2. Muse Spark, Meta's first model from its in-house AI lab, launched in Q1. It now powers Meta AI across all apps and the standalone Meta AI app. Sessions per user grew double digits following the rollout. More advanced models are in training. Meta also launched Meta Ads AI Connectors in open beta, letting advertisers link their ad accounts to external AI agents for campaign management and optimization. Ad impressions grew 19% year over year in Q1. The average price per ad rose 12%, driven by better ad performance, improved macro conditions, and currency tailwinds. Family of apps ad revenue reached $55 billion, up 33%. The value optimization suite, which steers ad spend toward higher-value conversions rather than volume, now runs at an annual revenue run rate above $20 billion, more than doubling year over year. Partnerships ads, which lets creators tag and earn commissions on products in their posts, reached a $10 billion revenue run rate in Q1, also more than doubling year over year. Reality Labs revenue was $402 million, down 2% year over year. Quest headset sales fell; AI glasses growth partially offset the decline. Daily users of AI glasses tripled year over year. More than 500 million users on each of Facebook and Instagram watch AI-translated videos weekly. Family daily active people reached 3.56 billion in March, down slightly from December due to internet outages in Iran and a WhatsApp block in Russia. Growth would have been positive quarter over quarter without those disruptions. Q1 2026 total revenue was $56.3 billion, up 33% year over year, or 29% on a constant currency basis. Family of apps revenue was $55.9 billion, up 33%. Operating income was $22.9 billion, a 41% operating margin. Net income was $26.8 billion, or $10.44 per share, including an $8.3 billion tax benefit. Capital expenditures were $19.8 billion. Free cash flow was $12.4 billion. Meta held $81.2 billion in cash and marketable securities at quarter-end.

Meta's Massive AI Spending Shows No Signs Of Slowing As CFO Susan Li Warns: 'We Have Continued To Underes

AI Infrastructure Push Accelerates Amid Rising Costs On Wednesday, during the company's first-quarter earnings call, CEO Mark Zuckerberg said the company is increasing its infrastructure capital expenditure forecast for the year, citing higher component costs, particularly in memory pricing. He added that ongoing internal and industry signals continue to support the company's aggressive investment strategy in AI infrastructure. She attributed the increase to higher component prices and additional data center investments aimed at supporting future capacity needs. We Continue To Underestimate Compute Needs: Li Responding to analyst questions about longer-term spending trends, Li acknowledged uncertainty around future capital intensity but emphasized a consistent pattern of rising demand. "We have continued to underestimate our compute needs even as we have been ramping capacity significantly," Li said, pointing to faster-than-expected advances in AI development and expanding internal use cases. She added that compute is becoming increasingly central to Meta's business, influencing model quality, product development, and overall organizational productivity. Flexible But Expanding Investment Strategy While Meta declined to provide a specific 2027 capital expenditure outlook, Li said the company is maintaining flexibility in its infrastructure planning. She noted that Meta could adjust spending timelines if capacity exceeds near-term demand, but noted that current investments are designed to support long-term AI growth. Meta Tops Q1 Earnings Estimates With Strong Revenue Beat Meta reported first-quarter revenue of $56.31 billion, surpassing Wall Street expectations of $55.45 billion. The company also posted adjusted earnings of $7.31 per share, ahead of the $6.78 per share forecast. For the second quarter, Meta projects revenue between $58 billion and $61 billion, compared with analyst estimates of $59.50 billion. Meta Falls On CapEx Surge Despite Strong Revenue Growth Outlook Meta Platforms shares ended the regular session at $669.12, down 0.33% and slid further in after-hours trading to $622.20, a decline of 7.01%, according to Benzinga Pro. Noting the decrease in after-hours, Deepwater Asset Management's managing partner Gene Munster called the reaction a "déjà vu" moment similar to what occurred after its September 2025 earnings report. Munster said Meta's capex is projected to grow 94% this year, compared with Wall Street expectations of 76% He added that he is "continually surprised" by investor negativity around the spending outlook, arguing that prior data show these investments are delivering results. Last year, Tiffany Wade of Columbia Threadneedle Investments said Meta appears to be ramping up spending again without providing clear evidence that the investment will generate returns, TipRanks reported. She also noted a key concern that Meta lacks a major enterprise cloud business that could directly benefit from rising AI demand. Separately, Stefan Slowinski of BNP Paribas said Meta continues to depend heavily on advertising and has struggled to successfully diversify into new revenue streams. Benzinga Edge data indicates that Meta ranks in the 88th percentile for Quality, highlighting strong performance in the short and medium term, but showing weaker momentum in long-term trends. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: 24K-Production on Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

US Stock Market | Meta ramps up AI spending amid regulatory heat and user concerns

Meta Platforms has sharply increased its capital spending outlook, underscoring its aggressive push into artificial intelligence even as it faces intensifying regulatory scrutiny and growing backlash over the impact of social media on younger users. According to a report by Reuters, the company now expects capital expenditure for 2026 to range between $125 billion and $145 billion, up from its earlier forecast of $115 billion to $135 billion. The upward revision signals a deeper commitment to building AI infrastructure, a move that unsettled investors and led to a decline in the company's shares in extended trading. The increased spending comes at a time when the tech giant is navigating mounting legal and regulatory pressures in both the United States and Europe. Authorities and advocacy groups have raised persistent concerns over the safety of children on social media platforms, leading to a wave of lawsuits and policy actions targeting the company's practices. Meta is currently facing thousands of legal cases globally, including lawsuits filed by individuals, municipalities, and school districts. These cases broadly allege that the company designed addictive platforms that negatively affect the mental health of children and teenagers. Several significant trials are scheduled in the coming months, including key proceedings in New Mexico and California that could influence a large number of similar cases. Adding to the challenges, the company reported a rare decline in its Daily Active People (DAP) metric during the latest quarter, the first such drop since it began disclosing the figure. The dip was attributed to internet disruptions in Iran and restrictions on WhatsApp access in Russia. Despite this, overall daily active users still rose 4% year-on-year to 3.56 billion, reflecting continued global engagement. On the financial front, Meta delivered first-quarter revenue of $56.31 billion, surpassing analyst expectations compiled by LSEG. The company has guided for second-quarter revenue between $58 billion and $61 billion, broadly in line with market estimates. However, the report by Reuters noted that the earnings failed to excite investors, particularly in comparison with stronger performances from industry peers such as Alphabet Inc. Analysts pointed out that while revenue met expectations, concerns remain over rising capital expenditure without a corresponding moderation in operating costs. Internally, Meta is also undergoing structural changes as it reorients itself around AI. Reuters previously reported that the company is planning additional layoffs in the second half of the year, following earlier workforce reductions aimed at improving efficiency. It is also experimenting with new technologies, including software tools to track employee activity, as part of broader efforts to train AI systems and automate workflows. The company's workforce stood at 77,986 employees at the end of March, marking a marginal increase from a year earlier but a decline from the previous quarter. These shifts reflect an ongoing transition as Meta seeks to balance cost control with heavy investment in next-generation technologies. As competition in AI intensifies and regulatory scrutiny deepens, Meta's strategy highlights the delicate trade-off between innovation-led growth and the operational, legal, and reputational risks that accompany it. (You can now subscribe to our ETMarkets WhatsApp channel)

Meta shares slide as tech giant hikes AI spending forecast, warns of youth social media backlash

Meta Platforms raised its annual capital spending forecast on Wednesday, plowing billions more into artificial intelligence infrastructure even as it grapples with possible losses from a global youth social media backlash. The Facebook parent projects 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell more than 6% in extended trading. The company also warned that legal and regulatory blowback in the European Union and the US "could significantly impact our business and financial results," after years of mounting criticism about children's safety on social media. "We continue to see scrutiny on youth-related issues and have additional trials scheduled for this year in the US, which may ultimately result in a material loss," it said. Meta is facing a rising number of teen social media bans around the globe, as well as thousands of court cases by individuals, municipalities, states and school districts alleging it designed its platforms to be addictive and harmful to children. More court cases are due in the coming months, including a second part of a New Mexico trial and a California case expected to test claims central to nearly 2,000 similar lawsuits filed by US school districts. Matt Britzman, an analyst at Hargreaves Lansdown, said Meta's higher capital spending spooked investors but is likely overblown as it reflects more expensive memory prices rather than changes to Meta's investment plan. Meta reported first-quarter revenue of $56.31 billion, beating the LSEG-compiled analysts' average estimate of $55.45 billion. It expects second-quarter revenue of $58 billion to $61 billion, largely in line with estimates of $59.5 billion. Family daily active people (DAP), a metric Meta uses to track unique users who open any one of its apps in a day, rose 4% in the first quarter from a year earlier to 3.56 billion. The results come weeks after Reuters reported first about Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows and reshape its workforce around the technology. "People are using AI to build more efficiently and we're building the next evolution of our company around these people," Zuckerberg said on a conference call after reporting financial results. "We're streamlining our teams so they aren't bigger than they need to be." But results were eclipsed by faster growth by other tech companies. "Meta's results met expectations, but failed to impress investors, especially in the context of much stronger results from Google," said Gil Luria, managing director of D.A. Davidson. He said investors were also concerned that Meta's spending plans rose without a corresponding reduction in operating expenses. Google parent Alphabet topped Wall Street estimates for quarterly revenue and profit. Meta, which owns Instagram, WhatsApp and Threads, has been spending heavily on AI infrastructure and high compensation for employees such as those working in its Meta Superintelligence Labs, which released its first AI model called Muse Spark earlier this month. Zuckerberg said Meta is rolling out more than 1 gigawatt of custom chips that it is developing with Broadcom, as well as a "significant amount" of AMD chips. The company's robust ad platform, which offers tools for automating and personalizing advertisers' campaigns, has remained its growth engine and has helped support its investments in AI infrastructure. Meta launched ads on messaging service WhatsApp and microblogging platform Threads last year, intensifying competition with platforms such as Elon Musk's X. Simultaneously, Instagram's Reels continue to jostle with TikTok and YouTube Shorts in the lucrative short-video market. For the first time, Meta is projected to overtake Alphabet as the world's biggest online advertiser, with an expected $243.46 billion in global net ad revenue this year, excluding traffic acquisition costs. The forecast, by research firm Emarketer, puts the Google- and YouTube-parent's annual ad revenue at $239.54 billion. Last week, the company expanded the availability of its Meta AI business assistant, designed to help advertisers optimize campaign performance and resolve technical issues through real-time guidance. Meta is installing new tracking software on US-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week. Meanwhile, China ordered Meta to unwind its $2 billion-plus acquisition of AI startup Manus on Monday, as Beijing tightens scrutiny of US investment in domestic startups developing frontier technologies.

Meta shares fall on concerns over AI spending, legal scrutiny - The Economic Times

Meta Platforms is significantly increasing its investment in artificial intelligence infrastructure. This comes as the social media giant faces growing backlash from young users globally. The company also warns of potential impacts from legal and regulatory issues in the US and European Union.Meta Platforms raised its annual capital spending forecast on Wednesday, signaling plans to pour billions more into artificial intelligence infrastructure even as it confronts potential losses from a global youth backlash against social media. The Facebook and Instagram parent projected 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell more than 6% in extended trading. Meta also warned that legal and regulatory blowback in the European Union and the U.S. "could significantly impact our business and financial results," after years of mounting criticism about children's safety on social media. "We continue to see scrutiny on youth-related issues and have additional trials scheduled ⁠for this ⁠year in the U.S., which may ultimately result in a material loss," it said. Meta is facing a rising number of teen social media bans around the globe, as well as thousands of court cases by individuals, municipalities, states and school districts that accuse the company of designing addictive platforms that are harmful to children. Several high-stakes court cases are due in the coming months, including the second part of a landmark New Mexico trial and a California case expected to test claims central to nearly 2,000 similar lawsuits filed by U.S. school districts. Adding to the gloom, Meta reported its first-ever quarterly decline in Daily Active People (DAP) since it started using that metric to measure user numbers across its social media platforms. It attributed the decline to internet ⁠disruptions in Iran, as well as restrictions on access to WhatsApp in Russia. Daily active people grew 4% year-over-year in the first quarter to 3.56 billion. Matt Britzman, an analyst at Hargreaves Lansdown, said Meta's higher capital spending spooked investors but is likely overblown as it reflects ⁠more expensive memory prices rather than changes to Meta's investment plan. Optimal size The results come weeks after Reuters first reported Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows and reshape its workforce around the technology. The company is planning further layoffs in the second half of the year, sources have told Reuters. Meta is also installing new tracking software on U.S.-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week. Meta Chief Financial Officer Susan Li confirmed the May layoffs on a conference call after reporting the financial results. "We don't really know what the optimal size of a company will be in the future," Li said. "I think there's a lot of change right now, with AI capabilities advancing rapidly." On the same call, CEO Mark Zuckerberg described seeing tiny teams use AI to make products that previously would have taken dozens of people months to finish. He said he wanted to build "the next evolution of our ⁠company around these people," which meant investing in top-tier infrastructure, increasing rewards for heavy hitters and "streamlining teams so they aren't bigger than they need to be." Meta said its workforce at the end of March was 77,986 people, up 1% from the same period last year but down from 78,865 at the end of December. The company reported first-quarter revenue of $56.31 billion, beating the LSEG-compiled analysts' average estimate of $55.45 billion. It expects second-quarter revenue of $58 billion to $61 billion, largely in line with estimates of $59.5 billion. But those results were eclipsed by faster growth by other tech companies. "Meta's results met expectations, but failed to impress investors, especially in the context of much stronger results from Google," said Gil Luria, managing director of DA Davidson. He said investors were also concerned that Meta's spending plans rose without a corresponding reduction in operating expenses. Google parent Alphabet topped Wall Street estimates for quarterly revenue and profit.

Meta lifts capital expenditure forecast, doubling down on AI push

Meta Platforms raised its annual capital expenditure forecast on Wednesday, doubling down on its decision to plow billions into artificial intelligence infrastructure even as it seeks cost savings via planned layoffs. The Facebook-parent now expects 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell around 5% in extended trading. Family daily active people (DAP), a metric Meta uses to track unique users who open any one ⁠of ⁠its apps in a day, rose 4% from a year earlier to 3.56 billion. The results come weeks after Reuters reported first about Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows and reshape its workforce around the technology. Meta, which owns Instagram, WhatsApp and Threads, has been spending heavily on AI infrastructure and high compensation for employees such as those working in its Meta Superintelligence Labs, which released its first AI model ⁠called Muse Spark earlier this month. The company's robust ad platform, which allows advertisers to automate and personalize their campaigns, has remained its growth engine and has helped support its ⁠investments in AI infrastructure. Its Advantage+ ad automation tools are powered by ad-retrieval engine Andromeda, ranking architecture Lattice and generative recommendation model GEM, helping it attract more marketers on the platform even as companies face geopolitical uncertainty due to the Middle East conflict. Meta launched ads on messaging service WhatsApp and microblogging platform Threads last year, intensifying competition with platforms like Elon Musk's X. Simultaneously, Instagram's Reels continue to jostle with TikTok and YouTube Shorts in the lucrative short-video market. For the first time, Meta is projected to overtake Alphabet as the world's biggest online advertiser, with an expected $243.46 billion in global net ad revenue this year, excluding traffic acquisition costs. The forecast, by research firm Emarketer, puts the Google- and YouTube-parent's ⁠annual ad revenue at $239.54 billion. Last week, the company expanded the availability of Meta AI business assistant, designed to help advertisers optimize campaign performance and resolve technical issues through real-time guidance. Meta is installing new tracking software on U.S.-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week. Meanwhile, China ordered Meta to unwind its $2 billion-plus acquisition of AI startup Manus on Monday, as Beijing tightens scrutiny of U.S. investment in domestic startups developing frontier technologies.

Meta shares fall on concerns over AI spending, legal scrutiny

April 29 (Reuters) - Meta Platforms raised its annual capital spending forecast on Wednesday, signaling plans to pour billions more into artificial intelligence infrastructure even as it confronts potential losses from a global youth backlash against social media. The Facebook and Instagram parent projected 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell more than 6% in extended trading. Meta also warned that legal and regulatory blowback in the European Union and the U.S. "could significantly impact our business and financial results," after years of mounting criticism about children's safety on social media. "We continue to see scrutiny on youth-related issues and have additional trials scheduled for this year in the U.S., which may ultimately result in a material loss," it said. Meta is facing a rising number of teen social media bans around the globe, as well as thousands of court cases by individuals, municipalities, states and school districts that accuse the company of designing addictive platforms that are harmful to children. Several high-stakes court cases are due in the coming months, including the second part of a landmark New Mexico trial and a California case expected to test claims central to nearly 2,000 similar lawsuits filed by U.S. school districts. Adding to the gloom, Meta reported its first-ever quarterly decline in Daily Active People (DAP) since it started using that metric to measure user numbers across its social media platforms. It attributed the decline to internet disruptions in Iran, as well as restrictions on access to WhatsApp in Russia. Daily active people grew 4% year-over-year in the first quarter to 3.56 billion. Matt Britzman, an analyst at Hargreaves Lansdown, said Meta's higher capital spending spooked investors but is likely overblown as it reflects more expensive memory prices rather than changes to Meta's investment plan. 'OPTIMAL SIZE' The results come weeks after Reuters first reported Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows and reshape its workforce around the technology. The company is planning further layoffs in the second half of the year, sources have told Reuters. Meta is also installing new tracking software on U.S.-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week. Meta Chief Financial Officer Susan Li confirmed the May layoffs on a conference call after reporting the financial results. "We don't really know what the optimal size of a company will be in the future," Li said. "I think there's a lot of change right now, with AI capabilities advancing rapidly." On the same call, CEO Mark Zuckerberg described seeing tiny teams use AI to make products that previously would have taken dozens of people months to finish. He said he wanted to build "the next evolution of our company around these people," which meant investing in top-tier infrastructure, increasing rewards for heavy hitters and "streamlining teams so they aren't bigger than they need to be." Meta said its workforce at the end of March was 77,986 people, up 1% from the same period last year but down from 78,865 at the end of December. The company reported first-quarter revenue of $56.31 billion, beating the LSEG-compiled analysts' average estimate of $55.45 billion. It expects second-quarter revenue of $58 billion to $61 billion, largely in line with estimates of $59.5 billion. But those results were eclipsed by faster growth by other tech companies. "Meta's results met expectations, but failed to impress investors, especially in the context of much stronger results from Google," said Gil Luria, managing director of D.A. Davidson. He said investors were also concerned that Meta's spending plans rose without a corresponding reduction in operating expenses. Google parent Alphabet topped Wall Street estimates for quarterly revenue and profit. (Reporting by Katie Paul in New York and Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed, Rod Nickel and Shri Navaratnam)

Meta lifts capital expenditure forecast, doubling down on AI push

April 29 (Reuters) - Meta Platforms raised its annual capital expenditure forecast on Wednesday, doubling down on its decision to plow billions into artificial intelligence infrastructure even as it seeks cost savings via planned layoffs. The Facebook-parent now expects 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion to $135 billion. Shares of the company fell around 5% in extended trading. Family daily active people (DAP), a metric Meta uses to track unique users who open any one of its apps in a day, rose 4% from a year earlier to 3.56 billion. The results come weeks after Reuters reported first about Meta's plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company's workflows and reshape its workforce around the technology. Meta, which owns Instagram, WhatsApp and Threads, has been spending heavily on AI infrastructure and high compensation for employees such as those working in its Meta Superintelligence Labs, which released its first AI model called Muse Spark earlier this month. The company's robust ad platform, which allows advertisers to automate and personalize their campaigns, has remained its growth engine and has helped support its investments in AI infrastructure. Its Advantage+ ad automation tools are powered by ad-retrieval engine Andromeda, ranking architecture Lattice and generative recommendation model GEM, helping it attract more marketers on the platform even as companies face geopolitical uncertainty due to the Middle East conflict. Meta launched ads on messaging service WhatsApp and microblogging platform Threads last year, intensifying competition with platforms like Elon Musk's X. Simultaneously, Instagram's Reels continue to jostle with TikTok and YouTube Shorts in the lucrative short-video market. For the first time, Meta is projected to overtake Alphabet as the world's biggest online advertiser, with an expected $243.46 billion in global net ad revenue this year, excluding traffic acquisition costs. The forecast, by research firm Emarketer, puts the Google- and YouTube-parent's annual ad revenue at $239.54 billion. Last week, the company expanded the availability of Meta AI business assistant, designed to help advertisers optimize campaign performance and resolve technical issues through real-time guidance. Meta is installing new tracking software on U.S.-based employees' computers to capture mouse movements, clicks and keystrokes to train its AI models, part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week. Meanwhile, China ordered Meta to unwind its $2 billion-plus acquisition of AI startup Manus on Monday, as Beijing tightens scrutiny of U.S. investment in domestic startups developing frontier technologies. (Reporting by Jaspreet Singh in Bengaluru; Editing by Sahal Muhammed)