Meta Platforms, the parent company of Facebook, Instagram and WhatsApp, saw its shares fall sharply in after-hours trading after unveiling a significant increase in planned artificial intelligence investment, even as the company reported strong earnings driven by rising user engagement and advertising growth.
The Silicon Valley group said it now expects capital expenditure to reach between $125 billion and $145 billion in 2026, up from a previously forecast range of $115 billion to $135 billion. The announcement triggered investor concern, sending shares down about 7 per cent in extended trading in New York.
The market reaction came despite better-than-expected financial results. Meta reported first-quarter revenue of $56.3 billion, above analyst forecasts, while net income rose 61 per cent year-on-year to $26.8 billion. The figure was boosted by an $8 billion tax benefit linked to US tax reforms, though underlying performance also reflected strong advertising demand.
Chief executive Mark Zuckerberg defended the company’s aggressive spending plans, arguing that investments in artificial intelligence were already improving engagement across Meta’s platforms. He said algorithm changes had increased time spent on Instagram by 10 per cent and boosted Facebook video engagement by more than 8 per cent compared with the previous quarter.
According to chief financial officer Susan Li, Meta has expanded the data used to train its recommendation systems and accelerated the delivery of personalised content. She said more than half a billion users are now watching AI-translated videos across Facebook and Instagram, helping expand content reach across languages and regions.
Daily active users across Meta’s apps reached 3.56 billion during the quarter, while advertising impressions rose 19 per cent year-on-year. The company’s AI-driven advertising tools, which automate targeting and content delivery for marketers, continue to play a central role in revenue growth.
Zuckerberg also outlined an ambitious long-term vision for AI, describing plans to build systems capable of acting as “personal superintelligence” for users. He said future AI tools could assist with personal goals in areas such as health, education and career development, and suggested that premium versions of these systems could become a paid service.
“We’re building systems that understand what people want and help them achieve it,” he said, adding that AI would increasingly personalise content and services across Meta’s platforms.
Despite the optimism, the company continues to restructure its workforce, with plans to cut around 8,000 roles, or roughly 10 per cent of staff. Li said Meta was still evaluating its optimal workforce size while increasing reliance on AI tools to boost productivity and efficiency.
The company’s performance has intensified debate among investors about the scale of Big Tech’s AI investments. While Meta’s core advertising business remains strong, concerns persist over whether rising infrastructure costs will be justified by future returns.
For now, investors remain split between confidence in Meta’s earnings momentum and uncertainty over the long-term financial impact of its expanding artificial intelligence ambitions.
