Meta raises 2026 capex to $145bn as shares fall
Meta Platforms has raised its 2026 capital expenditure guidance to as much as $145 billion, signaling an immense escalation in AI infrastructure spending that is straining investor confidence despite robust first-quarter revenue growth.
Meta Platforms now expects to spend between $125 billion and $145 billion on capital expenditures in 2026, an increase from its prior estimate of $120 billion to $135 billion. The revised guidance represents a roughly $50 billion jump over the company's 2025 capex base of $72.215 billion.
Chief Financial Officer Susan Li attributed the increase primarily to "higher component pricing this year and, to a lesser extent, additional data center costs to support future-year capacity." The financial commitment is staggering, with multiyear cloud deals and infrastructure purchase agreements driving a $107 billion surge in contractual obligations during the first quarter.
Wall Street has reacted negatively to the sheer scale of the outlay. Since reporting first-quarter results on April 29, Meta shares have fallen 12.81% to $582.90 as of July 2. While the company reported earnings per share of $10.44—crushing a $6.66 consensus—investors noted the beat was inflated by a one-time $8.03 billion tax benefit worth $3.13 per share tied to U.S. Treasury guidance on capitalized research and development.
The heavy spending is backed by an advertising business that continues to compound rapidly. First-quarter revenue rose 33.08% year over year to $56.311 billion, fueled by a 19% increase in ad impressions and a 12% rise in average price per ad. Operating income reached $22.872 billion, yielding a 41% margin, while operating cash flow hit $32.226 billion and free cash flow stood at $12.386 billion.
The stock found some footing this week, gaining 7.37% over the past seven days. A July 1 surge of 7.56% was linked to reports that Meta plans to launch a cloud infrastructure business to sell excess AI computing capacity. Chief Executive Mark Zuckerberg framed the strategy broadly, stating the company is "investing aggressively to meet our infrastructure needs and ensure we maximize our strategic flexibility over the coming years."
The divergence between Meta's fundamental performance and its stock price leaves a wide gap for the market to close. Despite the recent selloff, 57 analysts maintain a buy rating on the shares, with a consensus price target of $828. The coming quarters will determine whether the massive capital deployment translates into new revenue streams or merely weighs down the balance sheet.
