Meta shares slide as tech giant hikes AI spending forecast, warns of youth social media backlash
Meta Platforms Increases Capital Spending Forecast
Meta Platforms, the parent company of Facebook, has raised its annual capital spending forecast to invest more in artificial intelligence infrastructure. The company now projects a capital expenditure between $125 billion and $145 billion for 2026, up from the previous forecast of $115 billion to $135 billion. This decision comes despite potential losses from a global youth social media backlash.
Despite this announcement, shares of the company fell more than 6% in extended trading.
Concerns about legal and regulatory challenges in the European Union and the US have also been raised, with potential impacts on the company’s business and financial results. Meta is facing criticism regarding children’s safety on social media platforms.
The company is currently dealing with a growing number of social media bans targeting teens globally, as well as facing numerous court cases alleging that its platforms are addictive and harmful to children.
Revenue Exceeds Expectations
Meta reported first-quarter revenue of $56.31 billion, surpassing analysts’ average estimate of $55.45 billion. The company expects second-quarter revenue to be between $58 billion and $61 billion.
Family daily active people (DAP), a metric used by Meta to track unique users, increased by 4% in the first quarter to 3.56 billion.
Meta has been heavily investing in AI infrastructure and compensating employees working in its Meta Superintelligence Labs. The company is rolling out custom chips developed with Broadcom and AMD to support its AI initiatives.
The company’s advertising platform remains a key driver of growth, with Meta projected to overtake Alphabet as the world’s largest online advertiser this year. Meta has been expanding its ad offerings on platforms like WhatsApp and Threads, while also competing in the short-video market with Instagram’s Reels.
Meta is also focusing on AI development, with initiatives such as the Meta AI business assistant to help advertisers optimize campaigns. The company is implementing new tracking software on employees’ computers to train AI models for autonomous work tasks.
However, Meta faced challenges as China ordered the company to unwind its acquisition of AI startup Manus, reflecting the increasing scrutiny of US investments in frontier technologies by Beijing.
