Meta, the parent company of Facebook, recently revealed that its capital expenditures had increased by at least $5 billion due to the company’s aggressive investments in AI. This was announced in the company’s Q1 earnings report. The increase in costs was attributed to higher infrastructure and legal costs, as well as increased spending on AI research and product development efforts.
Meta originally estimated its capital expenses to be between $30 and $37 billion, but this has now been revised upwards to between $35 and $40 billion. The company also expects its projected total expenses for full-year 2024 to be at least $2 billion higher than expected, with a range of $96-99 billion compared to the previous forecast of $94-99 billion.
In addition to increased spending on AI, Meta is also facing legal challenges such as an antitrust lawsuit and legal actions related to children’s mental health. The company also expects significant increases in operating losses for its Reality Labs division, which focuses on virtual reality and augmented reality products, as it continues to invest in product development and ecosystem scaling efforts.
Market analysts such as Max Willens from Emarketer have noted that it is understandable for Meta to adjust its guidance given the scale of its investments in emerging technologies like AI. Companies investing heavily in these technologies may experience increased costs in the short term before seeing long-term benefits.
