Meta’s market jolt began when the Facebook owner lifted its 2026 capital expenditure forecast to a steep USD125 billion-145 billion, up from USD115 billion-135 billion. The company blamed more expensive memory chips and rising data centre build-out costs for the higher bill.
Quarterly revenue surged 33% to USD56.3 billion, beating the LSEG analyst consensus of USD55.45 billion. Management also guided second-quarter revenue to between USD58 billion and USD61 billion, broadly matching expectations.
Meta’s drive to finance AI is reshaping the business and workforce. Net income reached USD26.8 billion, but the company plans to cut about 8,000 jobs in May to help offset skyrocketing AI investment.
Daily active people across Facebook, Instagram, WhatsApp and Messenger edged down for the first time since Meta began disclosing the figure, slipping to 3.56 billion. The company attributed the drop to internet disruptions in Iran and new restrictions on WhatsApp usage in Russia, adding another operational risk outside its direct control.
Legal and regulatory pressure layered onto those concerns. In its outlook, Meta flagged that an expanding wave of child-safety lawsuits may ultimately lead to a material financial hit.
Earlier in the month, a jury found Meta and Alphabet’s Google negligent for platform designs that harmed young users, awarding USD6 million to a 20-year-old who said she became addicted to social media as a child. A separate jury in New Mexico imposed USD375 million in civil penalties in a related case.
Chinese authorities ordered Meta to unwind its USD2.5 billion purchase of AI startup Manus, undercutting a high-profile bet on international AI expansion.
Across the wider tech sector, Amazon, Google, Meta and Microsoft collectively prepare to pour an estimated USD720 billion, or about USD1.01 trillion, into AI infrastructure. That unprecedented spend is driving record revenue growth but also stretching investor tolerance for delayed payoffs from the AI boom.
Meta, whose stock dropped more than 6% during regular trade and around 7% after hours, now faces comparisons to its costly Metaverse push, where heavy capital outlays ran ahead of clear returns. The tension between delivering near-term profits and funding long-term AI dominance is the central question for investors.
