Meta on Wednesday projected a pronounced jump in annual capital expenditure as it channels resources into infrastructure for advanced artificial intelligence. The social media parent of Facebook and Instagram said it expects annual capital spending to range between $115 billion and $135 billion, up from $72.22 billion the year prior. Shares of the company fell about 2% in extended trading.
The company described its ad platform as the engine supporting these investments. Meta said advertisers are increasingly using automation and personalization features, enabling the business to finance its AI infrastructure push aimed at achieving superintelligence - a theoretical milestone where machines could exceed human performance.
As part of a reallocation of resources, Meta is reducing headcount by roughly 10% within its Reality Labs group, which employs about 15,000 people. The company is shifting focus from some metaverse projects to wearables within the unit, which has reported cumulative losses in excess of $70 billion since 2021.
Meta is simultaneously building multiple gigawatt-scale data centers across the United States. One of the projects is located in rural Louisiana; Meta said this site would be large enough to cover a significant portion of Manhattan. The size and energy needs of these facilities have prompted partnerships intended to secure power supply, including deals with Vistra, Oklo, and TerraPower. Meta said these arrangements position it among the leading corporate purchasers of nuclear power globally.
On the talent and partnerships front, Meta recently appointed Dina Powell McCormick as president and vice chairman, a move the company said would help drive government and investor partnerships for its AI initiatives. Her remit will also include oversight of the company’s global fleet of data centers.
Meta has sought additional external compute capacity as well, signing contracts with Alphabet, CoreWeave, and Nebius for extra compute power, a sign of pressing internal constraints, the company said. Those deals follow a period in which Meta stalled after its Llama 4 model drew a poor reception. The company is now placing its hopes on a set of new AI models launched internally earlier this month.
The recent quarterly results arrived alongside signs of strong advertiser uptake for Meta’s Advantage+ automated advertising suite. Analysts cited by the company said Advantage+ is winning adoption because it simplifies campaign setup and can improve return on ad spend. Over the past year, Meta expanded its advertising footprint by launching ads on WhatsApp and Threads, increasing competition with platforms such as X, while Instagram’s Reels continues to compete with TikTok and YouTube Shorts in the short-video market.
Key context and implications
- Capital allocation - Meta’s planned capex increase points to a multi-year commitment to build AI compute and data center capacity.
- Funding source - The company attributes its ability to sustain the spending to strength in its ad platform, driven by automation and personalization tools.
- Operational shifts - Reality Labs is being trimmed and refocused toward wearables after sustaining large cumulative losses.
Market reaction
Following the capital spending forecast and related disclosures, Meta’s shares declined roughly 2% in extended trading.