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Investing.com -- Meta Platforms on Wednesday raised its full year capital expenditure guidance to reflect expectations of higher component prices and additional costs to build out data centers. Shares in the company fell nearly 10% in early hours of trading on Thursday.
The Menlo Park, California-based company guided for 2026 capital expenditures of $125 billion to $145 billion, compared to a previous forecast of $115 billion to $135 billion, and a Street expectation of $125.26 billion, as compiled by Jefferies.
"Meta continues to earn the right to invest as long as it delivers faster top line growth for longer NT and higher FCFs LT," Truist Securities analyst Youssef Squali said.
Meta’s results come at a time when spending plans on artificial intelligence are being closely scrutinized. The owner of WhatsApp, Facebook, and Instagram has been aggressively spending on its infrastructure including billions in investments in data centers to support its AI ambitions.
The company boosted its capital expenditure plans to partly reflect expectations of higher prices of components this year. Ahead of META’s report, the Wall Street Journal said the tech behemoth was extending the life of some of its data center servers amid a "significant server supply deficit" due to an ongoing shortage of memory chips, citing two internal memos it viewed.
Full year expenses are still seen at $162 billion to $169 billion, versus a Street estimate of $163.77 billion. Meanwhile, Q2 2026 revenue is anticipated to be $58 billion to $61 billion. The midpoint of that range was just slightly under the consensus of $59.6 billion.
Moreover, JPMorgan analyst Doug Anmuth cut the rating on META to Neutral as he believes "full-stack AI competition is intensifying and Meta has a more challenging path to returns on heavy AI capex beyond advertising."
The social media giant’s quarterly report also comes just a day after the overall tech sector took it on the chin due to concerns around AI leader OpenAI’s growth. A Wall Street Journal report that the ChatGPT-developer recently missed its own targets for new users and revenue, citing people familiar with the matter, weighed on sentiment.
The report sparked concerns that the massive spending on AI capabilities by so-called hyperscalers such as Meta will ultimately reap benefits. Hyperscaler capital expenditure is expected to exceed $700 billion this year.
The Facebook and Instagram-parent earned $10.44 per share on revenue of $56.31 billion in Q1 2026. Analysts had expected a profit of $6.65 per share on revenue of $55.52 billion.
"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," top boss Mark Zuckerberg said in a statement.
META said its earnings per share were boosted by an $8.03 billion income tax benefit recognized in the quarter.
Users of its family of apps increased 4% Y/Y to 3.56 billion on average for March, though the number did tick down on a Q/Q basis. Meta said that decline was due to internet disruptions in Iran and restricted access to WhatsApp in Russia.
Additionally, the company also noted that it was keeping an eye on "active legal and regulatory matters, including headwinds in the EU and the U.S. that could significantly impact our business and financial results."
(Anuron Mitra contributed to this report.)
