Meta Platforms (NASDAQ:META) shares dropped more than 5% in after-hours trading on Wednesday after the company lifted its full-year capital expenditure forecast, citing rising component costs and continued investment in data center expansion.
The Meta Platforms owner now expects 2026 capital expenditures in the range of $125 billion to $145 billion, up from its prior outlook of $115 billion to $135 billion and slightly above the Street estimate of $125.26 billion, according to Jefferies data.
AI spending surge draws investor scrutiny
The updated guidance comes as investor focus intensifies on the scale of spending required to support artificial intelligence. Meta, which operates platforms like WhatsApp, Facebook, and Instagram, has been aggressively investing in infrastructure, particularly data centers, to advance its AI capabilities.
Part of the increased spending outlook reflects higher anticipated component prices. Ahead of the earnings release, The Wall Street Journal reported that the company had extended the lifespan of some data center servers due to a “significant server supply deficit” tied to ongoing shortages in memory chips, citing internal documents.
Revenue outlook and broader sector pressures
Meta maintained its full-year expense forecast between $162 billion and $169 billion, broadly in line with expectations of $163.77 billion. For the second quarter of 2026, the company projected revenue between $58 billion and $61 billion, with the midpoint slightly below the $59.6 billion consensus estimate.
The earnings report arrives amid broader pressure on the tech sector, following concerns about slowing growth at OpenAI. A recent Wall Street Journal report suggested the ChatGPT developer fell short of internal targets for user growth and revenue, weighing on sentiment across AI-focused stocks.
These developments have fueled debate about whether the massive capital outlays by hyperscalers like Meta will deliver sufficient returns, with total industry spending on AI infrastructure expected to exceed $700 billion this year.
Strong earnings performance despite concerns
Meta reported first-quarter earnings per share of $10.44 on revenue of $56.31 billion, significantly exceeding analyst expectations of $6.65 per share and $55.52 billion in revenue.
CEO Mark Zuckerberg highlighted the company’s progress, stating, “We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs. We’re on track to deliver personal superintelligence to billions of people.”
The company noted that earnings were boosted by an $8.03 billion income tax benefit recognized during the quarter.
User growth and regulatory risks in focus
Meta’s family of apps reached 3.56 billion average users in March, up 4% year over year, though slightly lower on a sequential basis. The company attributed the quarterly dip to internet disruptions in Iran and restrictions affecting WhatsApp usage in Russia.
In addition, Meta flagged ongoing legal and regulatory challenges that could weigh on future performance. The company stated it is monitoring “active legal and regulatory matters, including headwinds in the EU and the U.S. that could significantly impact our business and financial results.”
“For example, we continue to see scrutiny on youth-related issues and have additional trials scheduled for this year in the U.S., which may ultimately result in a material loss,” META said.