Meta Increases Capital Expenditure by 73% in AI Superintelligence Drive

Meta's Strategic Shift Towards Superintelligence

By Jaspreet Singh

Financial Projections and Revenue Expectations

Jan 28 (Reuters) - Instagram-owner Meta on Wednesday boosted its capital spending plans for the new year by 73% in the pursuit of "superintelligence," an effort to offer deeply personalized artificial intelligence to its large social media user base.

Infrastructure Investments and Data Centers

Meta shares jumped nearly 9% in extended trading. The company also forecast first-quarter revenue above Wall Street expectations and beat profit and revenue estimates for its quarter ended December 31.

Impact on Workforce and Metaverse Projects

Meta expects its capital expenditure for 2026 to be between $115 billion and $135 billion, driven largely by infrastructure costs including payments made to third-party cloud providers, higher depreciation of its AI data center assets, and higher infrastructure operating expenses. This compares with expectations of a $109.9 billion capex budget, according to Visible Alpha, and $72.22 billion Meta spent last year.

"This is going to be a big year for delivering personal superintelligence, accelerating our business infrastructure for the future and shaping how our company will work going forward," CEO Mark Zuckerberg said on a conference call with analysts.

Meta forecast 2026 total expenses to be in the range of $162 billion and $169 billion, up from $117.69 billion a year ago, driven by rising employee compensation as the company spends millions to hire top AI talent.

For the first-quarter, Meta expects revenue between $53.5 billion and $56.5 billion, compared with analysts' average estimate of $51.41 billion, according to data compiled by LSEG.

Meta is building several gigawatt-scale data centers across the United States, including one in rural Louisiana, a project U.S. President Donald Trump said would cost $50 billion. It would be large enough to cover a significant part of Manhattan.

Last year, Meta signed contracts with Alphabet, CoreWeave, Nebius for additional compute power, signaling a pressing need for capacity expansion due to internal constraints.

The spending spree has been prompted by Big Tech's rivalry in Silicon Valley's AI race, where Meta has stumbled after its Llama 4 model met with a poor reception. Now the company is betting on its new AI models, launched internally this month.

Meta's ad platform has remained its growth engine, allowing advertisers to automate and personalize their campaigns and help the company support its investments to achieve superintelligence - a theoretical milestone where machines could surpass human performance.

The company is laying off about 10% of staff at its Reality Labs group, which has about 15,000 employees, as it redirects resources from some of its metaverse products to wearables.

The unit — which has accumulated more than $70 billion in losses since 2021 — includes Meta's ambitious metaverse bet that prompted the company to change its name from Facebook.

The holiday quarter results come as the company's Advantage+ automated advertising suite is gaining strong advertiser adoption due to its ability to streamline campaign setup and enhance return on ad spend, analysts have said.

In the past year, Meta launched ads on WhatsApp and Threads, creating direct rivalry with platforms like Elon Musk's X, while Instagram's Reels continues to jostle with TikTok and YouTube Shorts within the lucrative short-video market.

(Reporting by Jaspreet Singh in Bengaluru; Additional reporting by Echo Wang in New York and Juby Babu in Mexico City; Editing by Leroy Leo, Sayantani Ghosh and Diane Craft)