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AI drives Meta’s results
Meta Platforms META.O forecast third-quarter revenue well above analysts’ estimates on Wednesday, as artificial intelligence once more powered its core advertising business, sending its shares soaring 11% in extended trading. The bumper results could ease investor worries about the social media giant’s frenzied pace of spending, at least for now, as it seeks to change Wall Street’s impression that it lags rivals including Microsoft MSFT.O and Alphabet’s GOOGL.O Google in the AI race.
Meta raised the bottom end of its annual capital expenditures forecast by $2 billion, to a range of between $66 billion and $72 billion, as CEO Mark Zuckerberg told analysts on a call that AI was making big leaps possible in its business that makes money by selling ads on Facebook and Instagram. Rising costs to build out data center infrastructure and employee compensation costs – Meta has been poaching researchers with mega salaries – would push the 2026 expense growth rate above the pace in 2025, Meta said. The company is planning higher capital expenses next year as well.
“I think there are all these questions that people have about what are going to be the timelines to get to really strong AI or superintelligence … we’ve observed the more aggressive assumptions, or the fastest assumptions, have been the ones that have most accurately predicted what would happen. I think that that just continued to happen over the course of this year too,” Zuckerberg said on a conference call with analysts.
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Investors appreciate Zuckerberg’s bold move
Investors have largely backed Zuckerberg’s pursuit of superintelligence – a hypothetical concept where AI surpasses human intelligence in every possible way – pushing the company’s stock up nearly a fifth so far this year. Meta’s post-market stock gains on Wednesday, along with those of Microsoft’s MSFT.O, added a combined half a trillion dollars in stock market value.
The concept of superintelligence is still highly speculative, but the market is confident that Meta’s strategy has been fueled not only by this vision but also by its execution. The company has become, in the eyes of the market, a relevant player in the future of AI. Meta has entered this landscape quickly, competing with its rivals Microsoft and Google.
Microsoft and Google also fight for the top spot in AI technology
Microsoft said on Wednesday it expects capital expenditure to exceed $30 billion in its fiscal first quarter, far above analysts’ estimate of $23.75 billion. At that pace, the company would spend roughly $120 billion on AI this fiscal year. The update came a week after Google parent Alphabet raised its capital spending plans for the year to about $85 billion and signaled more to come next year to meet surging demand for AI services.
Companies like Microsoft and Alphabet have confirmed a billion-dollar increase in capital spending on AI, demonstrating the new pattern of companies prioritizing technology investment. Demand for AI is only growing, and this movement has direct effects on the global technology ecosystem, from the supply chain to macroeconomic impacts, such as the labor market.
Race for AI raises new opportunities
Investments in AI have become part of companies’ corporate strategies, and the performance of companies like Meta, Microsoft, and Google could define the industry’s future direction for years to come. It remains to be seen whether the economic benefits will match the high financial stakes in this new market, but investor enthusiasm is evident.
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