Meta’s Higher AI Spending Outlook Rattles Investors, Shares Tumble After Earnings
Meta is using cash flow from its advertising business to fund its generative AI push and has launched a new model, Muse Spark. But the high cost of data centers, chips and computing infrastructure has made the potential payoff from increased capital expenditure a key metric for investors assessing the company.
Meta reported a 33% year-over-year increase in revenue in its first-quarter 2026 results and raised the upper end of its full-year AI capital expenditure forecast to $145 billion. Although revenue and profit beat market expectations, the heavy spending fueled concerns about pressure on margins. The shares tumbled after the results and were down more than 8% at one point in premarket trading.
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The history behind this eventMeta Issues $25 Billion in Bonds to Fund AI Capital Spending
Meta is accelerating construction of data centers and purchases of servers and computing chips needed to support generative AI, with its vast infrastructure requirements increasing funding pressure. Raising money in the bond market allows the company to finance its expansion while preserving cash flexibility, but has also sharpened investor scrutiny of whether its AI services can generate advertising and product revenue.
Meta recently completed a $25 billion bond offering to fund AI infrastructure in 2026 and raised the upper end of its full-year capital spending plan to $145 billion. Despite strong demand for the bonds, investors continue to question the returns on Meta’s heavy AI investment because the company has yet to provide a clear timeline for monetizing its products.
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