The social media giant reported third-quarter sales of $51.2 billion, a 26 per cent rise from last year, but a one-off tax charge of $15.9 billion dragged net income down to $2.7 billion, well below analysts’ forecasts. Shares fell more than seven per cent in after-hours trading as investors panicked over what the company called “aggressive” capital expenditure growth.
Chief executive Mark Zuckerberg told analysts that Meta was investing heavily in AI infrastructure to prepare for what it calls “superintelligence”, technology that could surpass human ability.
“That way, if superintelligence arrives sooner, we will be ideally positioned for a generational paradigm shift in many large opportunities. If it takes longer, then we’ll use the extra compute to accelerate our core business.”
Zuckerberg added that, in the worst case, “we would just slow building new infrastructure for some period while we grow into what we build.”
Investors didn’t find that reassuring. Zacks Investment Management portfolio manager Brian Mulberry said: “The total dollar spend is just kind of what hangs us up a little bit. They have to start doing a better job of showing us when that comes back to the balance sheet.”
Mulberry said his firm would hold its Meta stock but was “a little bit hesitant” to add more.
“The return on invested capital is definitely a huge metric for us and the fact that they are being a little bit cagey and not quite upfront with what exactly is going on doesn’t help soothe those fears,” he said.
Meta said it expects to spend far more next year as it races to expand its AI infrastructure, with overall expenses projected to grow at a “significantly faster percentage rate in 2026 than 2025.” The company didn’t provide a forecast for next year’s capital expenditure, but analysts at FactSet estimate spending could reach $97 billion, up from as much as $72 billion this year.
CFO Susan Li told analysts that employee compensation for AI researchers and engineers would be the second-largest contributor to cost growth, behind infrastructure. Meta has been showering AI talent with pay packages worth anywhere from tens of millions to more than $1 billion, depending on future stock performance.
At a recent White House dinner, Zuckerberg said Meta planned to spend at least $600 billion (about €554 billion) on data centres and related infrastructure in the US through 2028.
The company has already taken on $27 billion in private debt with Blue Owl Capital to build a massive new data centre in Louisiana called Hyperion, in which Meta holds a 20 per cent stake.
Over the summer, Meta rebranded its AI division, merged teams, hired top researchers from rival labs and gave the group a mission to develop “superintelligence.” It took a 49 per cent stake in Scale AI, a data-labelling startup, and poached its CEO along with several staff.
Last week, Meta laid off around 600 employees from its AI division, though the newer superintelligence team was spared.