Wednesday was a big day for the tech industry, with Meta, Google, Amazon and Microsoft all reporting earnings at the same time in the afternoon. Although its revenue rose 33% last quarter, Meta was the clear loser, with shares of the fourth company down more than 7%. the fastest From 2021.
That’s likely because the company is raising its already exorbitant spending expectations for the year. Meta said capital spending in 2026 will be at least $10 billion more than expected and could top $145 billion. CEO Mark Zuckerberg said much of that increase was due to “higher component costs, particularly memory prices,” while emphasizing his “confidence in this investment.”
The artificial intelligence boom has led to unprecedented data center construction, limiting the global memory chip supply and driving up the prices of these precious chips. It was the result global memory crisis This has not only hurt Meta and the rest of the AI industry, but also caused prices for consumer electronics like laptops and smartphones to drop. to fly.
Meta’s $145 billion is a dramatic increase from the $72 billion in capital spending it recorded last year, and Zuckerberg is betting it all on his AI effort.
Meta has lagged behind its industry rivals in the AI race Google have flown in the past. About 10 months ago, Zuckerberg acknowledged the situation and announced a massive acquisition effort that saw him spend billions upon billions of dollars on research and development and poaching talent from across the industry, including bringing in Scale AI founder Alexandr Wang to lead the new Meta Superintelligence Labs AI division.
Many were quite nervous about this commitment, given the dramatic collapse of the company’s last big bet on emerging technology, Metaverse. In Wednesday’s earnings report, Meta said Reality Labs, the unit that manages its Metaverse efforts, posted an operating loss of more than $4 billion, on sales of just $402 million. This adds to the $80 billion and more that the division has lost over the past six years.
But experts are somewhat optimistic about the AI bet, as earlier this month the tech giant debuted the first fruits of that investment with the Muse Spark AI model, a proprietary model the company plans to unveil in the future. It’s a step in the right direction, but Meta still needs to do more to confidently say the catch-up effort was successful.
“This was the first launch of Meta Superintelligence Labs, and it shows that we are on track to build a leading lab,” Zuckerberg assured investors following the company’s earnings call. “Now that we have a strong model, we can develop more new products.”
According to Zuckerberg, these new products will include two agents, one for personal and one for business purposes.
“We’re already testing an early version of business AI, and weekly conversations have increased 10x since the beginning of this year,” Zuckerberg said.
One way that AI has clearly shown to benefit the Meta is internally. More than half a billion weekly users on Facebook and Instagram now watch videos translated and dubbed by artificial intelligence, Meta CFO Susan Li said. The company is also incorporating the new AI model into parts of its core business, such as ads, and in particular, its recommendation system. The goal is to have hyper-personalized feeds for users with artificial intelligence.
“Because our recommendation systems operate at such a large scale, we will gradually implement this new research and technology over time,” Zuckerberg said. “But the trend over the last few years is clearly that we’re seeing increasing returns on the amount we can improve engagement for people and value for advertisers.”
Artificial intelligence also takes control internally in Meta. The company is laying off 10% of the workforce and reported Offers voluntary buyouts to 7% of US employees a trend based on artificial intelligence It has taken Silicon Valley by storm.
On the call, executives would not say whether the cuts are related to job automation, but Lee said a “leaner operating model” will help “offset the capital investments we’ve made.”
