Meta Raises Capital Expenditure Outlook
Meta Platforms has increased its full-year capital expenditure guidance, citing expectations of higher component costs and additional investments required to expand its data center infrastructure.
Stock Drops After Hours
Following the announcement, Meta’s Class A shares declined 5.3% in after-hours trading, as investors reacted to the higher spending outlook.
Higher Spending Driven by AI Expansion
The Menlo Park-based tech giant now expects 2026 capital expenditures to range between $125 billion and $145 billion. This marks a notable increase from its previous forecast of $115 billion to $135 billion and comes slightly above the Wall Street consensus estimate of $125.26 billion.
Meta continues to aggressively invest in artificial intelligence, allocating billions toward data centers and infrastructure to support its long-term AI ambitions.
Supply Constraints Add Pressure
Part of the increased spending forecast reflects rising component prices. Reports indicate that Meta has extended the lifespan of some data center servers due to a significant supply shortage, particularly involving memory chips.
Revenue and Expense Outlook
Meta expects full-year expenses to range between $162 billion and $169 billion, broadly in line with analyst expectations. For the second quarter of 2026, the company projects revenue between $58 billion and $61 billion, with the midpoint slightly below market estimates.
AI Spending Under Scrutiny
Meta’s results arrive during a period of heightened scrutiny around AI-related investments. Concerns have recently intensified following reports that OpenAI may have missed internal targets for user growth and revenue, raising broader questions about returns on massive AI spending.
Industry-wide, capital expenditures from hyperscalers like Meta are expected to surpass $700 billion this year, increasing pressure on companies to justify these investments.
Strong Earnings Performance
Despite concerns around spending, Meta delivered strong financial results for the first quarter of 2026. The company reported earnings per share of $10.44 on revenue of $56.31 billion, significantly exceeding analyst expectations of $6.65 per share on $55.52 billion in revenue.
CEO Mark Zuckerberg highlighted the company’s progress, noting strong momentum across its platforms and advancements in AI development, including new models from Meta Superintelligence Labs.
User Growth and Platform Performance
Meta’s family of apps, including Facebook, Instagram, and WhatsApp, reached an average of 3.56 billion daily users in March, representing a 4% year-over-year increase. However, usage declined slightly on a quarterly basis due to regional disruptions and access restrictions in certain markets.
Regulatory Risks Remain
The company also flagged ongoing legal and regulatory challenges, particularly in the United States and the European Union. Meta noted increasing scrutiny around youth-related issues and upcoming trials that could potentially impact its financial performance.
