Meta shares fall as AI spending jumps and child safety risks mount
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The news: Meta shares fell more than 6% after the Facebook parent raised its 2026 capital expenditure forecast to between USD125 billion (176 billion) and USD145 billion citing higher memory chip prices and additional data centre costs.
The numbers: The capex increase was up from USD115-135 billion. Quarterly revenue rose 33% to USD56.3 billion, ahead of the LSEG analyst estimate of USD55.45 billion. That comes after Meta announced it will cut about 8,000 jobs in May in order to offset its AI spending.
Net income was USD26.8 billion, and the company projected second-quarter revenue of USD58-61 billion, which was roughly in line with analyst expectations.
The context: The results were overshadowed by the spending increase and two other developments. Daily active people across Meta’s platforms slightly declined for the first time since the company began reporting the metric, to 3.56 billion, driven by internet disruptions in Iran and Russia’s restrictions on WhatsApp, the company said.
Included in the CFO outlook commentary, the company also warned that mounting child safety litigation “may ultimately result in a material loss.” A jury earlier this month found Meta and Alphabet’s Google negligent for designing social media platforms that harmed young people. It awarded a combined USD6 million to a 20-year-old woman who said she became addicted to social media as a child, and a separate jury awarded USD375 million in civil penalties in a lawsuit in the US state of New Mexico.
The result and market reaction also comes as China this week ordered Meta to unwind its USD2.5 billion acquisition of AI startup Manus.
The sources: Meta, The Wall Street Journal, Reuters
