Meta Raises Spending to $125 Billion-$145 Billion as Stock Slumps
Meta raised its expected capital spending to between $125 billion and $145 billion after first-quarter results on Wednesday. The company’s stock fell nearly 9% on Thursday as investors weighed stronger revenue and earnings against the heavier spending plan.
Meta Reports $56.3 Billion
Meta posted first-quarter net income of $26.8 billion and revenue of $56.3 billion, with revenue up 33% from the same quarter last year. A one-time $8 billion tax benefit helped lift net income, which makes the headline profit look stronger than the core business trend alone.
Susan Li Flags Compute Demand
Chief financial officer Susan Li said Meta had continued to underestimate its compute needs even as it ramped capacity significantly, as the advances in AI have continued and teams keep identifying new projects and initiatives. Her comment points to a company that is still spending ahead of demand rather than matching it after the fact.
Li also said the first-quarter decline of 20 million global users across Meta’s family of apps was caused by internet disruptions in Iran and a restriction on access to WhatsApp in Russia. Meta said it still had more than 3.5 billion daily active users across its app portfolio, and it said that figure would have been positive quarter over quarter without those disruptions.
Reality Labs Still Drains Cash
Reality Labs posted an operating loss of $4.03 billion in the quarter. Meta has lost about $80 billion on the division since late 2020, which keeps the company’s metaverse and virtual reality push a live drain on cash even as AI spending rises.
Matt Britzman said in a Thursday note that investors were trying to balance the scale of the AI opportunity against the cash required to chase it. That leaves the next read-through focused on whether Meta can keep revenue growth strong enough to absorb a spending plan now set as high as $145 billion.
