Meta Platforms shares are poised to begin the week under renewed scrutiny as investors assess the company's latest artificial intelligence hardware push and its ability to generate returns from massive spending. Reports late Friday indicated that Meta will test an AI-powered pendant next year, part of a broader wearables strategy that includes new AI glasses, according to The Information. Meta declined to comment on the report.
Reality Labs, the company's hardware division, posted a first-quarter operating loss of $4.03 billion on revenue of $402 million, underscoring the financial challenges of developing new devices. Any product launch will face intense scrutiny over cost control, not just innovation.
Meta shares closed at $632.51 on Friday, down 0.44% for the day but up approximately 3.6% for the holiday-shortened week. The gain outpaced the Nasdaq Composite, which rose 2.4%, and the S&P 500, which added 1.4% for its ninth consecutive weekly gain, the longest such streak since 2023. Technology stocks led the market as investors continued to buy on AI computing demand.
In addition to product news, Meta's board declared a quarterly dividend of 52.5 cents per share, payable June 25 to shareholders of record as of June 15.
Capital expenditure remains the dominant theme for investors. Meta raised its 2026 capex forecast to between $125 billion and $145 billion, up from a prior range of $115 billion to $135 billion. The company guided second-quarter revenue in the range of $58 billion to $61 billion. CEO Mark Zuckerberg told Meta's annual meeting that the company could consider launching a cloud-computing unit if AI expansion leaves excess datacenter capacity, according to TechRadar. Meta currently does not offer a public cloud service, which would place it behind Amazon, Microsoft, and Alphabet, but Zuckerberg said such a move is “definitely on the table.”
Analysts remain cautious. Gil Luria, managing director at D.A. Davidson, told Reuters that Meta's first-quarter results “met expectations but failed to impress investors,” especially compared to Alphabet's stronger growth. CFO Susan Li noted on the earnings call that “we don’t really know what the optimal size of a company will be in the future.”
Meta has also been restructuring its workforce. Earlier this month, Reuters reported that Meta was cutting 10% of its staff and moving 7,000 employees to AI teams. Zuckerberg later told workers that the company does not expect further company-wide layoffs this year.
The key risk for Meta is that its new AI tools, wearables, and subscriptions may not generate revenue fast enough to offset rising infrastructure costs, ongoing Reality Labs losses, and potential legal or regulatory expenses related to youth safety and privacy. A strong U.S. jobs report could push Treasury yields higher and weigh on growth stocks, which rely on future profits for valuation.
Investors face another test this week with the release of the May nonfarm payrolls report on June 5. The data will be watched for signals on inflation and the likelihood of Federal Reserve rate hikes that could impact stocks. Liz Ann Sonders at Schwab Center for Financial Research warned that a “hot employment report alongside still-rising inflation numbers” could shift expectations on Fed policy. Earnings from Broadcom will also provide a key check on the AI trade.
Meta now faces a critical question: can AI deliver returns before investors lose patience with the cost?
