Meta Platforms experienced a share price decline Friday as investors reacted to the company's aggressive capital expenditure projections for artificial intelligence infrastructure. The social media giant anticipates spending between $115 billion and $135 billion in 2026, a significant increase from the $72.22 billion planned for 2025.
Market Skepticism Amid Spending Surge
Financial markets displayed unease with Meta's substantial investment plans despite the company reporting strong fourth-quarter results, including revenue growth of 24% to $59.89 billion. Analysts noted that investors are increasingly demanding clearer returns on capital investments, particularly as major technology companies collectively ramp up AI-related expenditures.
"The current market environment shows limited patience for substantial investments without transparent pathways to capital returns," observed Morgan Stanley analysts. This sentiment reflects broader concerns across the technology sector as companies like Amazon and Alphabet have also faced market pressure following announcements of increased spending.
Financial Performance vs. Future Investment
Meta's operational metrics remain robust, with daily active users across its applications averaging 3.58 billion in December 2025. The company generated $14.08 billion in free cash flow during the fourth quarter after accounting for operational costs and investments.
However, the accelerated spending is already affecting profitability metrics. Operating margin is projected to decrease to 41% for 2025 from 48% in the fourth quarter of 2024, primarily due to rising depreciation and research expenses associated with AI development.
Strategic Vision and Market Reaction
CEO Mark Zuckerberg has positioned these investments as essential for achieving what he terms "personal superintelligence," emphasizing that 2026 will be a pivotal year for infrastructure development. The increased expenditures stem from multiple factors including higher third-party cloud service costs, greater depreciation from AI data center assets, and elevated infrastructure operating expenses.
While optimistic analysts speculate that Meta could eventually join the exclusive $4 trillion valuation club alongside Nvidia and Alphabet, skeptics highlight ongoing challenges. The Value Portfolio analysis on Seeking Alpha pointed to rising capital expenditures and continued losses in the Reality Labs division as potential threats to future free cash flow generation.
The central question for investors remains whether Meta can maintain advertising revenue growth while managing escalating costs. As the company accelerates data center investments, Wall Street will closely monitor whether cash flow remains sufficiently robust to support both operations and ambitious technological development.
