Meta’s spendy AI tab

Meta investors are more freaked out by the company’s AI spending than you were by your Sephora receipt at checkout.

The tech giant upped its 2025 capital expenditure guidance to between $70 and $72 billion from its previous $69 billion when it reported Q3 earnings yesterday—and forewarned even more gargantuan spending in 2026. Shares fell 11.33% today on the heels of the earnings report.

That wasn’t the only news that spooked Meta investors: The company reported earnings per share of $1.05, far under estimates of $6.72. But to be fair, that steep miss was due to a one-time massive tax charge that hit the company hard.

The company’s operating margin dropped 40%, down from 43% last year. The reason? AI hiring spiked research and development expenses up 28%. Revenue, however, came in strong for the quarter. Meta reported that its revenue jumped 26% to reach $51.2 billion for the quarter.

Today, right after the earnings miss, the company is pricing a nearly $30 billion bond sale, according to the WSJ.

All roads lead back to the AI question

While $71 billion is certainly no number to scoff at, Microsoft, Alphabet, and Meta all reported earnings yesterday, and all three companies announced major spending. So why is Meta the one that investors are punishing?

Part of the reason is that Microsoft and Alphabet already make money from AI in their cloud computing businesses, according to the WSJ, which makes analysts and investors give them less of a hard time about spending so much on building AI infrastructure.

In addition, Meta’s spending plan is also just plain higher compared to its Silicon Valley peers. To put its guidance in perspective, capital spending of $72 billion this year would equal 37% of the company’s projected revenue.

But CEO Mark Zuckerberg doubled down on Meta’s expensive AI bill during a call with analysts, arguing that the technology will help the company better advertise and recommend content to users of its social media apps Instagram and Facebook.

Now the question is: Will Meta upping the ante make its peers want to spend more, too? Or will that form of FOMO just be too expensive? —LB