Meta Raises AI Spending Forecast to $145 Billion as Expansion Costs Climb

Meta Platforms, the parent company of Facebook and Instagram, has raised the lower end of its annual capital expenditure forecast as it continues investing heavily in artificial intelligence (AI). The company now expects capital expenditure of US$135 billion to US$145 billion this year, compared with its previous forecast of US$130 billion to US$145 billion.

The increased spending reflects Meta’s push to expand its computing infrastructure, including chips and data centres, as competition with AI companies such as OpenAI and Anthropic intensifies. While these investments could strengthen its AI capabilities, the rising costs are putting pressure on the company’s historically strong free cash flow.

Revenue Beats Market Expectations

Meta reported quarterly revenue of US$64.60 billion, exceeding Wall Street expectations of US$63.37 billion. The stronger-than-expected result provides support for the company’s strategy of investing heavily in AI while continuing to grow its core advertising business.
Advertising remains Meta’s primary revenue source, with AI helping improve ad targeting, content recommendations and user engagement. Its platforms also face competition from TikTok and YouTube Shorts in short-form video, while Threads competes with Elon Musk’s X.
Meta has also pointed to early interest in its consumer-focused AI agent, Muse, and the release of a competitive new series of AI models as support for its investment plans. However, some enterprises have restricted the agent’s access over security concerns.

New Share Structure Could Help Fund AI Expansion

Meta plans to introduce new non-voting shares, which could help finance acquisitions and attract talent without reducing chief executive Mark Zuckerberg’s voting control.
The move comes as technology companies commit substantial resources to AI development and infrastructure. For Meta, the challenge is to maintain its competitive position while managing the financial impact of expanding data centre capacity and computing resources.
The company also faces ongoing legal and regulatory challenges. These include a US$25 billion penalty ordered by a judge in New Mexico and an agreement announced in August to pay as much as US$18 billion over a decade and restrict teenagers’ use of Facebook and Instagram to settle claims brought by nearly all US states.

Meta Shares Face Pressure Amid Rising Costs

Meta shares closed at US$697.52 on Wednesday before beginning to recover in after-hours trading. Despite the revenue beat, investors remain focused on the cost of the company’s AI expansion and its ability to generate returns from these investments.
The combination of stronger revenue and rising capital expenditure highlights the balance Meta must strike between funding future growth and maintaining financial discipline.
What Investors Should Watch Next
Investors will be watching Meta’s future spending, advertising performance and progress in AI adoption to assess whether its expanding investment programme can deliver sustainable returns.
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