Meta Faces Profit Hit from $16 Billion Charge, Plans “Notably Larger” AI Spending Next Year

Menlo Park, California – Meta Platforms Inc. (NASDAQ: META) said it expects “notably larger” capital expenditures next year as it accelerates investments in artificial intelligence, even as a one-time $16 billion tax-related charge from U.S. President Donald Trump’s “Big Beautiful Bill” dragged down third-quarter profit.

Shares of the Facebook parent fell 6% after hours, as the company reported quarterly net income of $2.71 billion, sharply lower than the $18.64 billion it would have posted without the charge.

Revenue climbed 26% to beat Wall Street estimates, but costs surged 33%, squeezing profit margins. The social media giant is ramping up AI spending to pursue superintelligence—a theoretical point where machines surpass human intelligence.

“It’s the right strategy to aggressively front-load building capacity,” CEO Mark Zuckerberg told analysts. “That way we’re prepared for the most optimistic timelines for superintelligence.”

He added that if progress lags, Meta will repurpose its computing infrastructure to strengthen its existing ad-driven business, or slow down infrastructure buildout when necessary.

AI Ambitions Drive Spending Surge

Meta has consolidated its AI efforts under a new unit called Superintelligence Labs, created in June and led directly by Zuckerberg. The company has embarked on an aggressive hiring spree, targeting high-end AI researchers and engineers, which has pushed up compensation costs.

Chief Financial Officer Susan Li said personnel costs will be the second-largest driver of expenses next year, following massive investments in compute infrastructure.

“Our compute needs have expanded meaningfully,” Li said. “We expect to invest aggressively both in our own data centers and through third-party cloud partnerships.”

Meta, one of Nvidia’s largest AI chip buyers, also raised its capital expenditure outlook for this year to $70 billion–$72 billion, up from an earlier range of $66 billion–$72 billion.

The company recently finalized a $27 billion financing deal with Blue Owl Capital to fund its massive “Hyperion” data center project in Louisiana, signaling a long-term bet on AI infrastructure.

User Growth, Ads Still Driving the Core Business

Despite rising costs, Meta continues to capitalize on its massive user ecosystem across Facebook, Instagram, WhatsApp, and Threads. Its AI-powered ad platform has boosted campaign automation, video ad optimization, and content localization, allowing marketers to reach diverse global audiences efficiently.

Meta has begun monetizing WhatsApp and Threads, challenging Elon Musk’s X, while Instagram Reels continues to compete for short-form ad revenue against TikTok and YouTube Shorts.

The company forecasts fourth-quarter revenue between $56 billion and $59 billion, compared with an analyst consensus of $57.25 billion, according to LSEG data.

Industry-Wide AI Spending Race

According to Morgan Stanley, the world’s biggest tech firms—Alphabet, Amazon, Microsoft, Meta, and CoreWeave—are on pace to spend roughly $400 billion on AI infrastructure this year alone.

The unprecedented scale of investment has stoked fears of an AI bubble, as investors demand concrete returns from companies betting heavily on machine intelligence.

Zuckerberg remains unfazed. “If superintelligence takes longer to arrive,” he said, “we’ll use the compute to accelerate everything else.”

Source: Accra Business News