Meta stocks plummet as concerns grow over soaring AI spending

issued Thursday, April 30, 2026 · 08:09 AM

[SAN FRANCISCO] Metaplatforms shares fell after the company raised its spending outlook for this year, reigniting concerns that historic levels of investment to catch up in the artificial intelligence race won’t pay off.

The social media giant expects full-year capital spending to be between $125 billion and $145 billion, well above analysts’ expectations and about 7.4% higher than the company’s previous forecast. Chief Financial Officer Susan Lee said the company is dealing with “increasing component prices” and additional data center costs.

Meta CEO Mark Zuckerberg has indicated that the company will spend hundreds of billions of dollars on AI infrastructure by the end of 2010. And that was before a memory chip shortage caused prices to skyrocket. The company announced multibillion-dollar deals with Nvidia, Advanced Micro Devices and Broadcom for chips and other hardware, and is building several large data centers to strengthen its efforts.

Meta shares fell 7% in after-hours trading. The stock had risen 1.4% year-to-date in New York by Wednesday’s (April 29) close.

Bloomberg Intelligence analyst Mandeep Singh said in a note that the spending increase “raises the stakes” given Meta’s use of proprietary AI systems, but “still falls short of Frontier Labs’ peers.” “So far, Meta’s standalone app hasn’t had the amount of engagement compared to other Frontier Labs.”

Meta wasn’t the only big tech company to increase spending. Amazon.com said Wednesday that sales fell more than expected in the first quarter as it expanded data center capacity. Alphabet Inc.’s Google has raised its capital spending forecast for this year to up to $190 billion. But Google managed to fuel a stock rally even after posting strong quarterly sales and profits, demonstrating confidence in the company’s AI bet.

Meta reported first-quarter net income of $26.8 billion. This includes US$8 billion in one-time non-cash income tax benefits from the implementation of the US tax policy signed into law in July. Analysts had estimated unadjusted net income at US$17.2 billion, without anticipating that effect.

Meta reported first-quarter sales of $56.3 billion, beating Wall Street’s expectations of $55.51 billion. Revenue for the quarter was expected to be between $58 billion and $61 billion, roughly in line with expectations.

Meta’s daily active users across all social media platforms decreased slightly in the first quarter to 3.56 billion. The company cited internet outages in Iran and Russia’s restrictions on access to WhatsApp. This was the first decline since the company began using this metric.

Increase in AI spending

To offset spending on AI, Meta recently imposed a number of cost-cutting measures. The company warned staff in an internal memo last week that it would cut about 8,000 jobs and not fill 6,000 open positions. The company had already implemented more limited layoffs earlier this year, impacting teams such as Reality Labs in its hardware division.

Evercore ISI estimates that May’s layoffs will save the company about $3 billion a year, and that companies will rely more on AI agents to help with tasks that once required human employees. “We believe the industry is just beginning to realize the growth opportunity presented by agent adoption and the increased level of investment required to support it,” Evercore analyst Mark Mahaney said in a note to investors.

Still, $3 billion is only a fraction of Meta’s total AI investment.

In early April, Meta debuted its latest AI model, Muse Spark. This is the first release since Zuckerberg launched a multibillion-dollar overhaul of the company’s AI organization last year. Additional large-scale language models will be rolled out later this year.

The growing number of child-safety lawsuits brought against Meth poses new headwinds. In a landmark ruling in March, a jury found Mehta responsible for the 20-year-old woman’s long-standing mental health struggles, which they blamed on social media addiction. Meta must pay millions of dollars to plaintiffs, but the ruling could put the company at risk for billions of dollars in further litigation. Two other lead cases are scheduled to be heard in California state court later this year.

Meta acknowledged on Wednesday that “juvenile-related matters continue to come under intense scrutiny, with additional trials scheduled in the United States this year, which could ultimately result in significant losses.” bloomberg