AI Euphoria Meets Stock Market Skepticism at Meta

Meta CEO Mark Zuckerberg's ambitious artificial intelligence visions are meeting skepticism on Wall Street. The Facebook parent company's stock dropped approximately 7% following the release of fresh business figures and a revenue forecast that missed expectations. This decline appears linked to missed profit expectations for the past quarter and a subdued revenue outlook for the current quarter.

Meta raised the lower end of its AI infrastructure investment forecast to $125 billion from $130 billion, while the upper limit remained at $145 billion. The company spent over $72 billion on these investments in 2025. Zuckerberg aims to surpass rivals like OpenAI, Google, and Elon Musk's xAI in the AI race, signaling a willingness to spend billions despite the risk of overbuilding data center capacity. Some experts and investors question the return on these substantial investments.

Zuckerberg countered these concerns in a call with analysts, emphasizing that current demand for computing power far outstrips supply. He suggested Meta might sell excess capacity to other companies. The company's booming advertising business continues to fund its AI expansion. In the last quarter, Meta's revenue increased 28% year-over-year to $60.8 billion, though net profit fell 14% to approximately $15.85 billion.

Meta reported earnings per share of $6.18, falling short of the analyst average estimate of $7.22. The company also set aside roughly $2.4 billion for legal disputes, including several U.S. lawsuits alleging inadequate protection of young users. For the current quarter, Meta projects revenue between $61 billion and $64 billion, slightly below the analyst consensus of around $63 billion. Meta's apps collectively reach 3.6 billion users, up from 3.56 billion three months prior.

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There is currently nowhere near enough supply of computing power relative to demand.