Meta has raised its spending forecast for 2026. Why are investors unhappy?

Meta, which owns social networks Instagram and Facebook and messenger WhatsApp, has raised its forecast for capital expenditures for 2026: it expects them to be between $125 billion and $145 billion, according to the company's first-quarter report. The previous range was $115 billion to $135 billion. The new forecast greatly exceeded analysts' expectations, Bloomberg notes. The company attributed the changes to expectations of "higher component prices" and, to a lesser extent, additional data center costs.

In the first quarter, capex totaled $19.84 billion. That, in contrast, was less than Wall Street's expectation of $27.57 billion, CNBC writes, citing StreetAccount data.

Meta shares fell more than 6% in extended trading on April 29 after the publication of the reports. Investors are again concerned that the record amounts of investments the company is making in an attempt to catch up with leaders in artificial intelligence will not materialize, Bloomberg writes. Meta has announced billion-dollar deals with Nvidia, AMD and Broadcom to produce chips and other hardware, and it is also building several large data centers to power AI.

The higher capital expenditure "raises the stakes" for Meta, given that it uses its own artificial intelligence, wrote Bloomberg Intelligence analyst Mandeep Singh. "So far, Meta's own [AI] app has not shown the same [user] engagement compared to other advanced labs," he said.

The increased capital outlay spooked investors, but those fears are likely overblown because they are related to more expensive memory chips rather than changes to Meta's investment plan, Hargreaves Lansdown analyst Matt Britzman noted in a Reuters story.

Capital expenditures put pressure on free cash flow, and Meta decided not to conduct a share buyback this quarter, Barron's noted. By comparison, the company spent $13 billion on buybacks in 2025.

Meta's revenue for the first quarter totaled $56.3 billion - 33% higher than in the same period a year ago. The result was better than analysts' forecasts of $55.45 billion, CNBC cited LSEG data. The sales forecast for the current quarter is $58-61 billion, which is roughly in line with Wall Street expectations, Bloomberg writes.

Net income was $26.8 billion: this includes a one-time $8 billion one-week tax benefit due to a change in U.S. law. Adjusted earnings per share reached $10.44, adding 62% year-on-year due to this tax benefit. Analysts had predicted $17.2 billion in net income without tax adjustments, Bloomberg noted.

Meta saw a 4% drop in the number of active people per day across all of its social networks to 3.56 billion, a drop the company attributed to internet outages in Iran and WhatsApp blocking in Russia. The figure fell for the first time since Meta started using it, Bloomberg claims.

The company warned that its legal and regulatory challenges in the U.S. and European Union over restrictions on access to social networks by children and teens under 16 "could significantly impact its business and financial results." In late March, a jury in Los Angeles ordered Meta and Google to pay damages in a high-profile social media addiction case.

This article was AI-translated and verified by a human editor