Meta Platforms has rattled markets with a downbeat quarterly revenue forecast, as its chief executive defends an aggressive, expensive push into artificial intelligence. The company also reported its lowest free cash flow in years, underscoring how heavily it is now spending on data centres, smart glasses and other AI infrastructure. That AI-related bill could reach about $US145 billion ($208.5 billion) in 2024 alone. Shareholders are watching closely, worried the payoff is not coming quickly enough to justify those numbers.
Meta continues to lean on its global internet advertising machine to fund this AI build-out, counting on steady ad dollars from Facebook, Instagram and other platforms. That model depends on high-margin ad revenue to cover the surge in capital expenditure tied to AI hardware and development. Investors already pushed back when Meta lifted its projected AI spending earlier in the year. The tension now sits between the company’s desire to move fast in AI and the market’s demand for near-term profit growth.
Many investors still carry scars from Meta’s earlier bet on virtual reality and the Metaverse, which absorbed tens of billions of dollars with little commercial payoff. Those projects were framed as the next big computing platform, but revenue has lagged far behind the investment. Meta’s new AI ambitions, from advanced data centres to consumer hardware like smart glasses, are starting to look similarly costly. That comparison makes shareholders more sensitive to any hint that AI, like the Metaverse, might deliver strategic benefits without matching financial returns.
