Mark Zuckerberg’s pledge to deliver “personal superintelligence” fails to calm Wall Street as the social media group lifts its 2026 capital expenditure forecast by another $10bn, even as an algorithm overhaul drives record time spent on Instagram and Facebook.
Meta Platforms wiped roughly 7 per cent off its share price in after-hours trading on Wall Street last night after the owner of Facebook, Instagram and WhatsApp jolted investors with another sharp increase in its artificial intelligence spending plans, even as a sweeping algorithm overhaul drove record engagement across its apps.
The Silicon Valley group, run by Mark Zuckerberg, said it now expected capital expenditure to come in at between $125 billion and $145 billion in 2026, up from the $115 billion to $135 billion range it had pencilled in only months earlier. The revised guidance pushed shares down $46.62, or 7 per cent, to $622.50 in extended trading in New York, despite first-quarter sales and profits that comfortably beat City and Wall Street forecasts.
The reaction underlines the growing unease among shareholders over Big Tech’s escalating AI arms race, with the world’s largest technology companies pouring tens of billions of dollars into data centres, custom chips and machine-learning talent in a bid not to be left behind, a dynamic that is increasingly setting the cost of doing business for smaller rivals and the digital advertising market on which countless British SMEs now depend.
Zuckerberg sought to reassure the market that the spending would pay off, arguing that Meta’s algorithm changes were already translating into stickier users and a more lucrative advertising business. The chief executive said improvements to content ranking had lifted “real time” spent on Instagram by 10 per cent in the first quarter, while video engagement on Facebook climbed by more than 8 per cent globally, the biggest quarter-on-quarter jump in four years.
Susan Li, chief financial officer, told analysts that Meta had doubled the length of user interactions used to train Instagram’s recommendation systems during the period, allowing its AI models to “develop a deeper understanding of user interests”. Engineers had also accelerated the speed at which fresh posts were surfaced, using “more advanced content understanding techniques” to identify content that might appeal to a user “even if they haven’t engaged with a lot of similar content”.
More than half a billion users on each of Facebook and Instagram are now consuming AI-translated videos after the company began auto-dubbing clips into a viewer’s local language, a move designed to widen the pool of recommendable content and, ultimately, monetisable inventory. Across Meta’s family of apps, daily active users hit 3.56 billion in the first quarter.
The increased engagement is feeding directly into the advertising machine that still generates the lion’s share of Meta’s revenues. Total ad impressions rose 19 per cent year-on-year in the period, as the group’s automated, AI-powered ad platform, which lets brands personalise campaigns at scale, continued to gain traction with marketers, including the small and mid-sized advertisers that increasingly account for the bulk of its long tail.
Zuckerberg used the earnings call to set out his most ambitious vision yet for the technology, telling investors that Meta intended to build AI agents capable of delivering “personal superintelligence” to billions of people. He said he wanted Meta’s products to “understand people’s goals specifically and then be able to just go work on them for them, and check back in”, whether those goals related to health, learning, relationships or careers.
“Literally every person in the world is going to want some version of it,” he said, suggesting that consumers would be “willing to pay a lot of money to have premium or high compute versions” — a hint that Meta is preparing to layer subscription products on top of its traditionally ad-funded model.
AI models, Zuckerberg added, would help Meta to “develop a first principles understanding of what you care about and what each piece of content in our system is about, so that way, we can show you more useful things for what you’re trying to accomplish.”
The bullish tone on AI sat uneasily, however, with the group’s plans to cut roughly 8,000 staff, or 10 per cent of its workforce, in May. Pressed on whether the technology would ultimately replace human workers, Zuckerberg insisted his view differed from much of Silicon Valley.
“My view of AI is very different from many others in the industry,” he said. “I hear a lot of people out there talk about how AI is going to replace people instead. I think that AI is going to amplify people’s ability to do what you want, whether that’s to improve your health, your learning, your relationships, your ability to achieve your personal career goals, and more.”
Li told analysts she was “unsure about the optimal workforce size” for the company, but said management was determined to use AI tools to “substantially increase our productivity”. She added: “We’re approaching this with a bias for wanting to use these tools to build even more products and services than we would have before. At the same time, we’re making very significant investments in infrastructure, and we are very focused on continuing to operate efficiently. So I think we will be continuously evaluating how we’re structured, just to make sure we’re best set up to deliver against our priorities over the coming years.”
For all the angst over capital spending, the underlying numbers were strong. Meta reported first-quarter revenue of $56.3 billion, ahead of Wall Street’s $55.58 billion consensus. Net income jumped 61 per cent year-on-year to $26.8 billion, well clear of the $17.2 billion analysts had pencilled in, although the figure was flattered by an $8 billion tax benefit linked to the US tax reform package signed into law last July.
The question now facing shareholders is whether Zuckerberg’s vast bet on AI infrastructure will deliver the productivity gains and new revenue lines needed to justify the bill, or whether, as some on Wall Street fear, the social media empire is about to enter another costly chapter of the metaverse playbook, only this time with a different acronym.
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Meta’s $145bn AI splurge spooks investors despite engagement surge
