Meta forecasts bigger capital costs next year as Zuckerberg lays out aggressive AI data center buildout
- Meta’s capital expenditure to rise significantly in 2026, CFO says
- CEO says he wants to aggressively build AI datacenter capacity
- Cost increases in Q3 outpaced revenue growth
- Meta raises lower end of capex outlook for 2025 by $4 bln, range now stands at $70-$72 bln
Oct 29 (Reuters) – Meta (META.O), on Wednesday forecast “notably larger” capital expenses next year thanks to investments in artificial intelligence, including aggressively building data centers to power its AI push.
The Facebook and Instagram parent reported third-quarter revenue growth of 26% that beat market estimates, but that jump was outpaced by a 32% increase in costs.
Shares of the company – that have risen 28% so far this year – fell 8% after the bell, as Wall Street digested Zuckerberg’s even bigger capital plans to build out AI data center capacity that will pressure margins.
Meta also recorded a nearly $16 billion one-time charge related to U.S. President Donald Trump’s ‘Big Beautiful Bill’ that pummeled its third-quarter profit. Excluding the charge, net income in the quarter would have increased to $18.64 billion, compared with the reported net income of $2.71 billion.
After a late start, Meta has doubled down on AI, with a target of achieving superintelligence, a theoretical milestone where machines outthink humans. To that end, it has pledged to spend hundreds of billions of dollars to build several massive AI data centers for superintelligence and is planning for bigger financial outlays to meet big compute needs.
CEO Mark Zuckerberg , said on a conference call with analysts,
There’s a range of timelines for when people think that we’re going to get superintelligence,
“I think that it’s the right strategy to aggressively front-load building capacity, so that way we’re prepared for the most optimistic cases.”
He said,
If superintelligence takes longer than expected, then Meta will use the extra compute to accelerate its core business, and in the worst-case scenario, the company would slow building new infrastructure for some periods,
Jeremy Goldman, a senior director at Emarketer, said:
After a few years of existential hand-wringing, the company has found its rhythm again by doing what it does best: scaling attention and monetizing it with ruthless efficiency,
“While everyone else is still pitching AI moonshots, Meta has quietly turned AI into margin. Its ad tools are sharper, its targeting smarter, and its short-form video business is finally paying off.”
HIRING SPREE BOOSTS EXPENSE OUTLOOK
Meta, determined to catch up with rivals including Microsoft (MSFT.O), and Alphabet’s (GOOGL.O), has accelerated spending on AI, reorganizing its AI efforts under a “Superintelligence Labs” unit in June. Zuckerberg has personally led an aggressive spree to hire talent. The company is among the top buyers of Nvidia’s (NVDA.O), sought-after AI chips.
Zuckerberg said,
Meta Superintelligence Labs is off to a strong start,
“I think that we’ve already built the lab with the highest talent density in the industry … We’re also building what we expect to be an industry-leading amount of compute.”
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Meta forecasts bigger capital costs next year as Zuckerberg lays out aggressive AI data center buildout, source
