Meta raises AI spending to $145 billion as Zuckerberg defends massive infrastructure bet

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.

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 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

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 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 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 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 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'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 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

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)