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. Meta, however, was the clear loser, with its shares dropping more than 7% despite a 33% revenue increase—its fastest growth since 2021. The company upped its capital expenditures to at least $145 billion for 2026, a dramatic increase from the $72 billion it spent last year. CEO Mark Zuckerberg emphasized confidence in this investment, attributing most of the rise to higher memory chip costs due to a global memory crisis caused by the AI boom. Meta’s AI-driven data center buildout has constrained global memory chip supply, driving up prices for both AI and consumer electronics like laptops and smartphones.
Meta’s AI turnaround effort, announced roughly 10 months ago, includes billions in R&D investments and talent poaching, such as bringing in Scale AI’s founder Alexandr Wang to lead Meta Superintelligence Labs. While the Metaverse division, Reality Labs, reported an operating loss of over $4 billion and only $402 million in sales, experts remain cautiously optimistic about the AI bet. Meta debuted Muse Spark, a proprietary AI model, earlier this month, marking progress but not yet a confirmed success. Zuckerberg assured investors that the work is on track, with plans to open-source the model and develop novel AI products, including two agents for personal and business use. Internally, AI is already transforming Meta: over half a billion weekly users on Facebook and Instagram now watch AI-translated videos, and AI is being integrated into core systems like ads and recommendation engines to hyper-personalize feeds.
Meta is also laying off 10% of its workforce, with voluntary buyouts offered to 7% of U.S. staff, following a trend in Silicon Valley driven by AI automation. While executives did not explicitly link layoffs to job automation, CFO Susan Li noted that a leaner operating model would help offset substantial investments. The AI-driven changes aim to improve engagement and value for advertisers, with Meta betting on long-term returns from AI advancements.
Source: Gizmodo