Meta shares tumble 10%, erase $175B after higher capex
Meta shares fell about 10%, erasing roughly $175 billion after it raised 2026 capex guidance to $125–$145 billion, citing higher memory-chip prices and AI data-center costs.
Meta Platforms shares plunged about 10% on Thursday, wiping roughly $175 billion from the company’s market value after the company raised its 2026 capital-expenditure forecast to $125–$145 billion and cited higher memory-chip prices and added AI data-center costs. The drop followed Meta’s first-quarter earnings report.
The new 2026 capex range is roughly 7% above the January guidance of $115–$135 billion. Chief Financial Officer Susan Li told investors the increase reflects higher memory-chip pricing and incremental data-center costs to support artificial intelligence work. First-quarter capital spending was $19.8 billion. Li said recent headcount reductions will help offset some of the increased infrastructure spending.
Meta reported first-quarter revenue of $56.31 billion, a 33% year-over-year increase and the company’s strongest quarterly growth since 2021. Net income was $26.8 billion, or $10.44 per diluted share, a figure that benefited from an $8 billion one-time tax benefit tied to U.S. Treasury guidance on R&D. Advertising revenue remained strong, supported by AI-driven recommendations that increased engagement on Reels and other video products.
Chief Executive Mark Zuckerberg defended the higher spending on the earnings call, describing the increased outlay as “a vote of confidence in Meta’s AI roadmap.” The company provided second-quarter revenue guidance of $58 billion to $61 billion.
The market response was swift. JPMorgan downgraded Meta to Neutral and cut its price target to $725 from $825, citing intensifying competition among full-stack AI players and a more challenging path to returns on large infrastructure investments. The decline was the stock’s largest single-day percentage drop in roughly six months. After the selloff, META traded near $606 per share.
Industry observers highlighted the combination of layoffs and rising AI infrastructure spending. Analyst Gene Munster said the layoffs, paired with higher AI spending, are another data point on AI’s impact on employment. Meta has been expanding investments in chips, servers and networking equipment to scale generative AI features across its apps; higher component prices, particularly for memory chips, have pushed up the cost of that buildout.
Investors weighed the quarterly earnings beat against the larger capital plan. Revenue and ad growth pointed to demand, while the expanded capex outlook raised questions about near-term cash needs and the timing of returns on those investments.
