"Shares of Meta Platforms took a big hit following the social media company's most recent earnings report, when Meta forecast massive spending growth (measured by both expenses and capital expenditures) in 2026. The commentary on spending growth marks a good time for investors to take a step back and reassess whether the company's growth strategy is sensible or too risky."
"But with capital expenditures rising more than 100% in Q3 and expense growth expected to accelerate next year, the earnings growth algorithm is about to shift dramatically. Now investors will have to trust in Meta founder and CEO Mark Zuckerberg's vision -- because the sheer size and speed of the tech giant's infrastructure and AI (artificial intelligence) buildout means that the company is shifting into a period in which it's sacrificing profitability today in hopes of bigger profits later."
Meta forecast massive spending growth through 2026, lifting its 2025 capital expenditures outlook to $70–$72 billion from a prior starting point of $66 billion. Capital expenditures rose more than 100% in Q3, and expense growth is expected to accelerate in 2026 as the company expands AI infrastructure and adds technical talent. Third-quarter revenue increased 26% year over year to $51.2 billion, supported by higher ad prices, engagement gains, a 14% rise in ad impressions and a 10% increase in average price per ad. Daily active users exceeded 3.5 billion. The company is sacrificing near-term profitability to build AI capacity.
Read at The Motley Fool
Unable to calculate read time
Collection
[
|
...
]