Meta has announced a substantial increase in capital expenditures for the upcoming year, projecting costs could rise to as much as $135 billion in 2026 as part of a comprehensive investment in artificial intelligence (AI). This forecast surpasses analysts’ expectations, who anticipated expenditures around $110 billion. The company’s shares rose more than 10% in after-hours trading following a report of a 24% revenue increase in the fourth quarter, reaching $59.9 billion, which was also above market predictions.
Chief Executive Mark Zuckerberg attributed the growth to “record-breaking holiday demand and AI-driven performance gains.” He emphasized the company’s commitment to developing advanced AI technology, aiming to create “personal superintelligence” to remain competitive with industry leaders like OpenAI and Google. New AI models and products are expected to be released throughout the year, marking a significant acceleration in its AI initiatives.
Total expenses for Meta are expected to range between $162 billion and $169 billion this year, with a focus on bolstering AI infrastructure. This follows a turbulent period where the company faced investor backlash after previous earnings releases due to concerns over high spending. To support these expansive plans, Zuckerberg has introduced the Meta Compute initiative, which aims to construct extensive AI infrastructure, potentially costing billions.
While scaling back investment in other areas, such as its metaverse projects, Meta is concentrating on AI-based wearables, including smart glasses.
Why this story matters:
- Meta’s significant investment in AI reflects broader trends in the tech industry focused on machine learning and automation.
Key takeaway:
- Meta is pivoting towards AI by increasing capital expenditures while reducing investments in less profitable ventures.
Opposing viewpoint:
- Critics argue that excessive spending on AI could divert funds from other essential areas and may not yield immediate returns.
