Meta Raises Spending Forecast Amid AI Push And Regulatory Pressure
Meta Platforms has increased its annual capital spending forecast, signalling a deeper commitment to artificial intelligence infrastructure. The company now expects capital expenditure for 2026 to range between $125 billion and $145 billion, up from its earlier estimate of $115 billion to $135 billion.
However, investor sentiment weakened following the announcement, with shares falling more than 6 percent in extended trading. The revised forecast reflects rising costs linked to AI expansion, including more expensive memory components, rather than a fundamental shift in investment strategy.
At the same time, Meta warned that growing legal and regulatory challenges in both the United States and the European Union could significantly affect its financial performance. The company continues to face scrutiny over concerns related to youth safety on its platforms.
Legal Challenges And Youth Backlash Intensify
Meta acknowledged increasing pressure from regulators and legal bodies, particularly regarding its impact on younger users. The company noted that upcoming trials in the United States could lead to material financial losses.
Additionally, several governments are introducing restrictions on teenage access to social media platforms. Alongside these measures, Meta is confronting thousands of lawsuits from individuals and institutions. These cases allege that its platforms were intentionally designed to be addictive and harmful to children.
Among the most significant legal proceedings are a major trial in New Mexico and a closely watched case in California. These cases are expected to influence nearly 2,000 similar lawsuits filed by school districts across the United States.
User Growth Slows Despite Global Reach
Meta also reported a notable shift in user metrics. For the first time, the company recorded a quarterly decline in its Daily Active People measure, which tracks usage across its platforms.
The company attributed this decline to external disruptions, including internet outages in Iran and restrictions affecting WhatsApp access in Russia. Nevertheless, on a yearly basis, Daily Active People increased by 4 percent, reaching 3.56 billion in the first quarter.
Despite steady growth, the user decline raised concerns among investors, especially as competing technology firms continue to report stronger performance.
Workforce Restructuring And AI Integration
Meta is undergoing significant organisational changes as it integrates artificial intelligence more deeply into its operations. The company is planning additional layoffs in the second half of the year, following earlier workforce reductions.
Moreover, Meta is introducing new internal tools designed to monitor employee activity. These tools will collect data such as mouse movements and keystrokes to help train AI systems capable of performing workplace tasks autonomously.
Company leadership indicated that the evolving capabilities of artificial intelligence are reshaping how teams are structured. Smaller, highly skilled teams are increasingly able to deliver outputs that previously required much larger groups.
Financial Performance And Outlook
Meta reported first-quarter revenue of $56.31 billion, exceeding analyst expectations. It projected second-quarter revenue between $58 billion and $61 billion, broadly aligning with forecasts.
Despite these results, investors remained cautious. Concerns centred on rising capital expenditure without a corresponding reduction in operating costs. While Meta maintained its overall expense forecast for 2026, the increased investment in AI infrastructure has raised questions about future profitability.
The company’s workforce stood at 77,986 employees at the end of March, showing a slight increase from the previous year but a decline from the end of December. This reflects ongoing adjustments as Meta seeks to balance efficiency with innovation.
With inputs from Reuters