Meta Platforms saw its shares drop 7% in after-hours trading after unveiling another sharp increase in its artificial intelligence spending plans, even as a sweeping algorithm overhaul drove record engagement across its apps.
The Silicon Valley group, led by Mark Zuckerberg, said it now expected capital expenditure to reach between $125 billion and $145 billion in 2026, up from the $115 billion to $135 billion range announced just months earlier. The revised guidance pushed shares down $46.62 to $622.50 in extended trading, despite first-quarter sales and profits that beat Wall Street forecasts.
The reaction highlights growing shareholder unease over Big Tech’s escalating AI arms race, with the world’s largest technology companies pouring tens of billions into data centers, custom chips and machine-learning talent.
Zuckerberg sought to reassure the market that the spending would pay off, pointing to early results from the company’s algorithm changes. Improvements to content ranking lifted “real time” spent on Instagram by 10% in the first quarter, while video engagement on Facebook climbed more than 8% globally—the biggest quarter-on-quarter jump in four years.
Susan Li, chief financial officer, told analysts that Meta had doubled the length of user interactions used to train Instagram’s recommendation systems during the period. Engineers also accelerated the speed at which fresh posts were surfaced, using more advanced content understanding techniques to identify content that might appeal to users even if they hadn’t engaged with similar content before.
More than half a billion users on each of Facebook and Instagram are now consuming AI-translated videos after the company began auto-dubbing clips into viewers’ local languages. Across Meta’s family of apps, daily active users hit 3.56 billion in the first quarter.
The increased engagement is feeding directly into Meta’s advertising business. Total ad impressions rose 19% year-on-year, as the group’s automated, AI-powered ad platform continued to gain traction with marketers.
Zuckerberg set out his most ambitious vision yet for the technology, telling investors that Meta intended to build AI agents capable of delivering “personal superintelligence” to billions of people. He said he wanted Meta’s products to “understand people’s goals specifically and then be able to just go work on them for them, and check back in,” whether those goals related to health, learning, relationships or careers.
“Literally every person in the world is going to want some version of it,” he said, suggesting consumers would be “willing to pay a lot of money to have premium or high compute versions”—a hint that Meta is preparing to layer subscription products on top of its traditionally ad-funded model.
The bullish tone on AI sat uneasily with the group’s plans to cut roughly 8,000 staff, or 10% of its workforce, in May. Pressed on whether the technology would ultimately replace human workers, Zuckerberg insisted his view differed from much of Silicon Valley.
“My view of AI is very different from many others in the industry,” he said. “I hear a lot of people out there talk about how AI is going to replace people instead. I think that AI is going to amplify people’s ability to do what you want, whether that’s to improve your health, your learning, your relationships, your ability to achieve your personal career goals, and more.”
Li told analysts she was “unsure about the optimal workforce size” for the company, but said management was determined to use AI tools to “substantially increase our productivity.”
Despite the angst over capital spending, the underlying numbers were strong. Meta reported first-quarter revenue of $56.3 billion, ahead of Wall Street’s $55.58 billion consensus. Net income jumped 61% year-on-year to $26.8 billion, well clear of the $17.2 billion analysts had pencilled in, although the figure benefited from an $8 billion tax benefit linked to a recent US tax reform package.
The question now facing shareholders is whether Zuckerberg’s vast bet on AI infrastructure will deliver the productivity gains and new revenue lines needed to justify the bill, or whether the social media empire is about to enter another costly chapter—only this time with a different acronym.