Meta Platforms is splashing some severe money on AI infrastructure, and buyers have flinched.
The corporate reported first quarter 2026 earnings outcomes on Wednesday and raised its full-year 2026 capital expenditure steerage to $125 billion to $145 billion, up from a earlier vary of $115 billion to $135 billion. Meta instructed buyers the enhance was the results of increased costs for elements and “additional data center costs to support future-year capacity.”
Final yr, Meta spent $72.2 billion on capex, up roughly $30 billion from the yr earlier than. The corporate is now guiding to almost double what it spent in 2025, and greater than it spent in 2025 and 2024 mixed.
In after-hours buying and selling, the inventory tumbled greater than 6% on account of the leap in capex steerage. In distinction, Alphabet and Amazon—that are additionally spending huge sums on AI infrastructure buildout, and which each introduced earnings on Wednesday—noticed their share costs rise after hours, partially as a result of they each reported AI-related development of their large cloud-services companies.
Requested about ROI, Zuckerberg says it’s ‘a very technical question’
Zuckerberg pointed to “memory pricing” as a driver of the upper prices and he tried to assuage buyers by explaining how he expects the spending plan to pan out.
“Every sign that we’re seeing in our own work and across the industry gives us confidence in this investment,” mentioned Zuckerberg. “That said, we are very focused on increasing the efficiency of our investments, and as part of that, we are rolling out more than one gigawatt of our own custom silicon that we’re developing with Broadcom as well as significant amount of AMD chips to complement the new Nvidia systems we’re rolling out as well.”
Zuckerberg was requested throughout the name to clarify any signposts or key elements he’s watching to make sure Meta is “on the right path” to producing a wholesome return on the funding over the subsequent 12 to 24 months in Meta AI, new developments or to its core algorithm.
“That’s a very technical question,” Zuckerberg responded. “The things that we’re watching are to make sure that we’re on track to building leading models and leading products. The formula for our company has always been to build experiences that can get to billions of people and focus on monetizing them once you get to scale.”
He added that he doesn’t suppose Meta has “a very precise plan for exactly how each product is going to scale month over month, or anything like that, but I think we have a sense of the shape of where these things need to be.”
“I’m quite comfortable that the lab we’re building is on track to be a leading lab in the world,” mentioned Zuckerberg.
Income and revenue climb sharply
Meta reported Q1 revenues of $56.3 billion, up 33% from the identical interval a yr in the past. Working revenue rose 30% to $22.9 billion, and income grew 61% to $26.8 billion. The corporate famous that income obtained a lift from an $8 billion tax profit within the first quarter, which helped offset a $15.9 billion tax cost within the third quarter of 2025 when the One Massive Stunning Invoice Act took impact.
Whole bills within the first quarter ballooned 35% to $33.4 billion, pushed largely by infrastructure prices and worker compensation, mentioned chief monetary officer Susan Li. Meta doled out a sequence of inventory choice grants to Li and different executives focusing on a $9.46 trillion market capitalization, a feat no firm has ever achieved.
“The growth in infrastructure costs was due to higher depreciation data center operating costs and third-party cloud spend,” mentioned Li. “The growth in employee compensation was driven by technical hires we’ve added over the past year, particularly AI talent.”
Li additionally famous the corporate shared internally that it could “reduce the size” of Meta’s worker base in Might. The corporate reportedly plans to slash lots of of jobs within the U.S. and overseas amongst groups together with gross sales, recruiting, and on its {hardware} unit.
Meta, like different main tech corporations, has been pouring cash into knowledge facilities and servers to coach its AI fashions, which it views as important to its core promoting enterprise and longer-term investments in private AI brokers for enterprise, well being, and entrepreneurship. Zuckerberg has mentioned the investments will strengthen the advert enterprise by making suggestions extra related and bettering the way in which adverts are focused to extend the time customers spend on its platforms together with Instagram, WhatsApp, and Fb.
On the earnings name, Zuckerberg mentioned its new AI fashions will assist the corporate evolve past statistical patterns displaying the varieties of individuals partaking with content material.
“For the first time in Meta’s history, we’re going to be able to develop a first-principles understanding of what you care about and what each piece of content in our system is about,” he mentioned. “So that way, we can show you more useful things for what you’re trying to accomplish and we’ll also be able to create personalized content specifically for people to help you achieve your goals as well.”
Melissa Otto, head of Seen Alpha Analysis at S&P World, mentioned the downturn within the inventory worth after hours was a transparent response to the rise in capex steerage. It was already “pretty high” mentioned Otto, and the corporate had a very good quarter, “but it wasn’t a blowout.”
“It raises this question about what is the real ROI on all this capex that they’re spending,” mentioned Otto. “I think the investment community is getting a little frustrated at the amount of cash they’re burning.”
Otto mentioned buyers are looking out for details about how Meta’s funding in AI infrastructure is contributing to top-line and effectivity positive factors.
Throughout his remarks, Zuckerberg mentioned the Superintelligence AI lab launched “significantly upgraded” model of Meta AI, which was its first.
“Over the past 10 months, we have built the strongest research team in the industry and established the scientific and technical foundations to scale very advanced models,” mentioned Zuckerberg. “Now that we have a strong model, we can develop more novel products as well.”
