Meta Forecasts “Notably Larger” Capital Expenses in 2025 Amid Heavy AI Investments
Meta Platforms Inc. is preparing for significantly higher capital expenditures next year, fueled by its aggressive investments in artificial intelligence (AI). The social media giant reported a nearly $16 billion one-time charge related to President Trump’s ‘Big Beautiful Bill,’ which severely impacted its third-quarter profit. Following the announcement, Meta’s shares fell more than 6% in after-hours trading.
### Strong Q3 Revenue But Rising Costs Pressure Margins
Excluding the one-time charge, Meta revealed its third-quarter net income would have risen from the reported $2.71 billion to an adjusted $15.93 billion-$18.64 billion range. While the company’s third-quarter revenue surpassed estimates with a robust 26% growth, this was overshadowed by a 33% increase in costs, putting pressure on profit margins.
### Doubling Down on AI and the Quest for Superintelligence
After a cautious start, Meta has intensified its AI efforts with an ambitious goal of achieving superintelligence—a hypothetical point where machines surpass human intelligence. To realize this vision, Meta has invested hundreds of billions of dollars in building massive AI data centers and is planning even larger financial commitments to meet increasing computational demands.
CEO Mark Zuckerberg emphasized on a recent analyst call, “There’s a range of timelines for when people think that we’re going to get superintelligence. I think that it’s the right strategy to aggressively front load building capacity, so that way we’re prepared for the most optimistic cases.”
Zuckerberg added that if superintelligence takes longer to achieve, Meta will repurpose the additional computing power to enhance its core business. In the worst-case scenario, the company may slow down new infrastructure development during certain periods.
### Revised Capital Expenditure Outlook
Meta now expects capital expenditures to reach between $70 billion and $72 billion this year, up from its previous forecast of $66 billion to $72 billion. The company anticipates further upward pressure on capital expenditures and overall expenses in 2025.
Employee compensation is also set to rise, with costs primarily driven by AI talent hired throughout the year, according to Meta’s CFO David Li.
### Leveraging a Massive User Base to Boost Ad Revenue
Meta continues to capitalize on its extensive user base with an AI-optimized advertising platform that helps marketers automate campaigns, improve video ad quality, translate ads, and generate persona-based images tailored to different customer segments.
The company has expanded its advertising offerings to WhatsApp’s messaging platform and the newly launched social network Threads—directly competing with Elon Musk’s X. Meanwhile, Instagram’s Reels feature remains locked in competition with ByteDance’s TikTok and YouTube Shorts for short-video ad revenue.
### Organizational Changes and Funding Initiatives in AI
In June, Meta reorganized its AI projects under a new division called Superintelligence Labs following leadership departures and lukewarm feedback on its Llama 4 language model. Additionally, Meta recently secured a $27 billion financing deal with Blue Owl Capital—its largest-ever private capital agreement—to fund a massive new data center project in Richland Parish, Louisiana, dubbed “Hyperion.”
Meta also announced plans to streamline its AI team by cutting approximately 600 jobs to improve decision-making efficiency and amplify the responsibilities and impact of remaining roles.
### Industry-Wide AI Investment Amid Economic Uncertainty
Meta’s substantial AI investments come alongside similar moves by other tech giants like Alphabet, Amazon, Microsoft, and CoreWeave. Morgan Stanley estimates these companies will collectively spend around $400 billion on AI infrastructure this year.
These massive expenditures, amid ongoing economic uncertainty, have raised concerns about a potential AI investment bubble. Executives face increasing pressure to demonstrate tangible results as such initiatives risk triggering losses, workforce reductions, and management reshuffles.
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Meta’s bold AI ambitions underscore its commitment to shaping the future of technology, even as it navigates significant financial and operational challenges in the short term.
https://nypost.com/2025/10/29/business/meta-takes-16b-hit-to-earnings-from-trumps-big-beautiful-bill-warns-of-higher-ai-costs/