Meta's outlook disappoints Wall Street, shares fall

The parent company of Facebook, Meta, has disappointed Wall Street with its financial outlook for the current quarter, leading to a significant drop in its stock price. The company's shares fell by more than six percent in after-hours US trading following the announcement.

Meta projected a revenue range of $61 billion to $64 billion for the ongoing quarter. This forecast falls short of the average expectation among financial analysts, who had anticipated around $63 billion. The company also adjusted its investment forecast for AI infrastructure, raising the lower end of its capital expenditure range from $125 billion to $130 billion, while the upper limit remained at $145 billion. In 2025, Meta spent over $72 billion on these investments.

Meta CEO Mark Zuckerberg is pursuing ambitious goals to surpass rivals like OpenAI, Google, and Elon Musk's xAI in the artificial intelligence race. This pursuit involves substantial financial commitments, even with the risk of overbuilding data center capacity. Some experts and investors question the profitability of these large-scale AI investments.

Financially, Meta's booming advertising business continues to be the primary revenue driver. In the past quarter, the company reported a 28 percent year-over-year increase in revenue, reaching $60.8 billion. Net profit, however, saw a 14 percent decrease compared to the previous year, amounting to approximately $15.85 billion. The company's platforms, including Facebook, WhatsApp, Instagram, and Threads, collectively reach 3.6 billion users, a slight increase from 3.56 billion three months prior.