Does Meta Need a Decade of Efficiency?

"It's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years, so I think we should invest more there [...] our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too."

"That's the CEO explicitly saying "we should invest more," not "we should maintain efficiency." Meta is training Llama 4 on a cluster exceeding 100,000 H100 GPUs, larger than anything competitors have disclosed. CFO Susan Li warned of "significant acceleration in infrastructure expense growth" for 2026 as depreciation and operating costs from the expanded fleet hit the income statement."

"Meta's 40% operating margin exceeds Alphabet ( NASDAQ:GOOGL) at 30.5%. The company's 82% gross margin provides cushion. Meta AI now has 500 million monthly active users, and AI-driven feed improvements drove an 8% increase in Facebook time spent and 6% on Instagram. Over one million advertisers used generative AI tools to create 15 million ads last month, with a 7% lift in conversions."

Mark Zuckerberg declared 2023 the "year of efficiency" after Meta shed 21,000 employees and tightened spending. Operating margins expanded from 25% to 42% and the stock tripled. Meta guided capital expenditures to $70–72 billion for 2025, up from $30 billion in 2024. Third-quarter revenue reached $51.24 billion, up 26% year-over-year, with operating income of $20.54 billion at a 40% margin. Net income fell 83% to $2.71 billion due to a $15.93 billion one-time tax charge; adjusted earnings were $18.64 billion. Capital spending surged 135% to $19.37 billion in a single quarter. Meta is training Llama 4 on a cluster exceeding 100,000 H100 GPUs and expects continued significant infrastructure investment amid strong AI-driven user and advertiser engagement, creating potential margin pressure if infrastructure costs accelerate faster than revenue growth.

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