Meta Platforms Inc. saw its shares slide after the company reported quarterly earnings that missed Wall Street expectations and raised its capital expenditure forecast to $145 billion, a move that underscores a sweeping shift in corporate priorities toward artificial intelligence.
Why investors are uneasy
The earnings report, released Wednesday, showed revenue growth that fell short of analyst estimates. Meta's stock dropped more than 4% in after-hours trading. The company now expects to spend $145 billion on capital expenditures this year, up from a previous range of $140 billion to $145 billion. That money is largely going to data centers, servers, and AI infrastructure.
Investors have grown wary of the massive spending required to build out AI systems, especially when the payoff remains uncertain. Meta's Reality Labs division, which houses its metaverse and AI projects, posted an operating loss of $4.5 billion in the quarter. The division has now lost more than $60 billion since 2021.
What the AI push means for energy
The surge in AI investment is expected to ripple through energy markets. Data centers that train and run large language models consume enormous amounts of electricity. Meta's expanded spending signals that demand for power from tech companies will keep climbing. Utilities and renewable energy developers are already racing to secure contracts to supply that load. Some analysts predict AI could push U.S. electricity demand growth to levels not seen in decades.
Meta itself has signed agreements to buy renewable energy to power its data centers. But the sheer scale of the new build-out could strain grids and drive up costs for other users. The company has not disclosed specific power purchase agreements tied to the new spending.
Reshaping the digital economy
Beyond energy, Meta's pivot to AI is likely to reshape the broader digital economy. The company is embedding AI tools into its advertising platform, its social media algorithms, and its virtual reality products. That could change how businesses reach customers and how users interact with online services.
Meta's chief executive has described AI as the company's biggest investment opportunity. But the shift also carries risks. Regulators in Europe and the U.S. are scrutinizing how AI models are trained and deployed, particularly around data privacy and misinformation. Meta faces ongoing antitrust cases in both jurisdictions.
The company's earnings call offered few details on how it plans to monetize its AI spending beyond existing ad revenue. Analysts pressed for more clarity on product roadmaps, but executives largely stuck to broad statements about long-term potential.
Meta's next quarterly report is due in late April. By then, investors will be watching for signs that the AI spending is starting to pay off — or that the company is willing to tighten its belt.
