Catenaa, Thursday, April 30, 2026- Meta stock plunged by the most in six months after the company raised its spending outlook for the year, amidst fears that the massive investments that Zuckerberg is making to catch up in the AI race won’t pay off.
The social media giant projected full-year capital expenditures of $125 billion to $145 billion, exceeding analysts’ estimates and marking a roughly 7.4% increase from the company’s previous projections in January.
Meta said the increase is partly driven by the conviction that its AI strategy is working, but the company is also dealing with “higher component pricing” and additional data center costs, Chief Financial Officer Susan Li said Wednesday on a call with investors.
Zuckerberg has said that his company will spend hundreds of billions of dollars on AI infrastructure by the end of the decade, and that was before a memory chip shortage triggered a surge in prices.
Meta has announced billion-dollar deals with Nvidia, Advanced Micro Devices, and Broadcom for chips and other hardware just since the beginning of the year, and is building several massive data centers to power its efforts.
On Thursday, Meta is kicking off a bond sale of between $20 billion and $25 billion in debt, Bloomberg News reported.
Zuckerberg said he has “confidence” in the decision to further boost AI spending, but that confidence wasn’t reciprocated by Wall Street.
Investors balked when the CEO failed to provide details about how Meta plans to make a return on its investments, sending shares down as much as 10% on Thursday after trading got underway in New York, their biggest intraday drop since October.
Meta reported $56.3 billion in first-quarter sales, beating Wall Street’s estimate of $55.51 billion. It projected sales of $58 billion to $61 billion for the current quarter, roughly in line with expectations.
Daily active people across all of Meta’s social media platforms slightly declined in the first quarter to 3.56 billion.
The company cited internet disruptions in Iran and Russia’s restrictions on WhatsApp access. That marked the first drop since the company began using that metric. Li, the CFO, said Meta would have seen positive user growth absent the geopolitical conflicts.
Meta also reported first-quarter net income of $26.8 billion, which included a one-time, non-cash income tax benefit of $8 billion due to the implementation of the US tax policy signed into law in July.
Analysts had estimated non-adjusted net income of $17.2 billion, without anticipating the benefit.
Meta recently imposed several cost-cutting measures, a process Zuckerberg described Wednesday as “increasing the efficiency of our investments.”
Last week, the company alerted staff in an internal memo that it would be cutting roughly 8,000 jobs and wouldn’t be filling 6,000 open roles.
Meta already carried out other, more limited cuts earlier this year that hit its Reality Labs hardware division, among other teams.
