Meta’s aggressive artificial intelligence (AI) spending spree has spooked investors, wiping more than $200 billion off the company’s market capitalization within two days after its quarterly earnings report.
The company’s operating expenses surged by $7 billion year-over-year, with capital expenditure nearing $20 billion, largely driven by new data centers and a hiring binge for AI talent.
CEO Mark Zuckerberg told investors the spending was necessary to secure long-term dominance in AI research and infrastructure. “The right thing to do is accelerate this to make sure that we have the compute we need,” he said on an earnings call.
However, the remarks did little to calm Wall Street. Meta’s stock plunged 12% by Friday’s close, reflecting growing unease about massive investments that have yet to yield tangible revenue.
Analysts say the company’s most visible AI product, Meta AI, has over a billion users—but critics argue the figure is inflated by integration into Facebook and Instagram, with limited standalone adoption.
Meta’s new Vanguard smart glasses and its Vibes video generator have also failed to impress investors looking for a clear monetization strategy.
Zuckerberg said Meta’s Superintelligence Lab is developing “frontier models with novel capabilities,” but admitted the company is still months away from unveiling new AI products.
As the AI race heats up, rivals such as Google and Nvidia continue to post strong earnings, deepening concerns that Meta’s AI push could become a costly gamble without a clear path to returns.
