Meta Platforms shares fell more than 6% after the company raised its 2026 capital expenditure forecast, signaling significantly heavier investment in artificial intelligence infrastructure while warning of mounting legal and regulatory risks.
Meta now expects annual capital spending between $125 billion and $145 billion, up from its previous $115 billion to $135 billion range. The increase reflects Meta’s accelerating push to reshape Facebook, Instagram, and its broader business around AI systems, automation, and next-generation infrastructure.
Despite first-quarter revenue of $56.31 billion beating analyst expectations, investors reacted negatively to the combination of rising costs, slower relative momentum versus rivals like Google, and concerns that Meta’s spending surge is not yet paired with major operational savings.
The company also highlighted growing regulatory threats tied to child safety concerns, social media addiction lawsuits, and global youth restrictions. Meta warned that upcoming court cases in both the US and Europe could materially impact business performance.
CEO Mark Zuckerberg is simultaneously restructuring Meta’s workforce around AI, with further layoffs expected as the company seeks leaner teams supported by automation. CFO Susan Li indicated Meta is reassessing what the “optimal size” of the company should be in an AI-driven future.
Although daily active people still grew 4% year-over-year to 3.56 billion, investor concerns were amplified by Meta’s first-ever quarterly decline in this metric since introducing it, even if largely attributed to geopolitical internet restrictions.
The broader market concern is increasingly clear: Meta is spending aggressively to compete in AI while facing growing legal scrutiny over its core social media platforms. Investors now appear focused less on current revenue and more on whether Meta can justify enormous infrastructure expansion without worsening operational or regulatory exposure.
