The Facebook and Instagram parent also warned that total expenses will climb substantially, driven by rising infrastructure costs, including third-party cloud spending, higher depreciation, and increased operating expenses.
Meta projected annual capital expenditure between $115 billion and $135 billion, a dramatic increase from $72.22 billion a year earlier. The company also forecast 2026 total expenses of $162 billion to $169 billion, up from $117.69 billion last year.
Shares rose nearly 4% in extended trading following the announcement, signaling investor confidence in Meta’s long-term AI strategy despite the near-term cost surge.
AI Infrastructure and the “Superintelligence” Drive
Meta’s ad platform remains the company’s primary growth engine, enabling advertisers to automate and personalize campaigns and generate the cash flow needed to support its AI investments. But the company is now clearly betting that a massive buildout of AI infrastructure will ultimately reshape its future.
The company has said it aims to achieve “superintelligence” — a theoretical milestone where machines exceed human performance — a goal that demands enormous computing power and advanced data-center capacity.
Costly Metaverse Unit Faces Cuts
Meta also announced it will lay off about 10% of staff at its Reality Labs division, which employs roughly 15,000 people, as it shifts resources from some metaverse initiatives toward wearable devices.
Reality Labs has posted more than $70 billion in losses since 2021, and its ambitious metaverse vision remains a key part of Meta’s long-term strategy — even as the company rebalances priorities.
Massive Data-Center Expansion
Meta is building several gigawatt-scale data centers across the U.S., including a major facility in rural Louisiana. The project was estimated by former President Donald Trump to cost $50 billion, and would be large enough to cover a significant portion of Manhattan.
To support the power demands of its data centers, Meta has partnered with energy firms such as Vistra, Oklo, and TerraPower, positioning the company among the world’s leading corporate buyers of nuclear energy.
Leadership Changes and External Partnerships
In a move to strengthen government and investor relations, Meta recently appointed Dina Powell McCormick, a known Trump ally, as president and vice chairman. She will help oversee partnerships tied to Meta’s AI agenda and focus on the company’s global data-center network.
Meta has also signed contracts with companies including Alphabet, CoreWeave, and Nebius to secure additional computing capacity, highlighting the urgency of its infrastructure expansion amid growing internal constraints.
AI Rivalry Intensifies After Model Setbacks
Meta’s spending surge reflects the fierce competition among Big Tech firms in the AI race. The company has faced setbacks after its Llama 4 model received a weak market reception, and it is now betting on newly launched internal AI models.
Advertising and Social Media Competition
Meta’s Advantage+ automated advertising suite has gained strong adoption among advertisers, analysts said, helping to offset rising infrastructure costs by improving campaign efficiency and return on ad spend.
Over the past year, Meta has also expanded ads on WhatsApp and Threads, positioning itself in direct competition with platforms such as Elon Musk’s X. Meanwhile, Instagram’s Reels continues to battle TikTok and YouTube Shorts in the lucrative short-video market.