Major Tech Firm's Shares Dip Following Announcement of Increased AI Investment
Shares in a leading tech company, widely known for its social media platforms, took a hit after it revealed plans to boost investment in artificial intelligence (AI). The announcement came alongside its first-quarter earnings results, which exceeded expectations, but were overshadowed by the higher projected costs associated with the AI spending.
The company's first quarter profits exceeded predictions, pulling in an impressive $10.44 earnings per share (EPS) on a revenue of $56.3 billion. This surpassed analysts' predictions, which had anticipated adjusted earnings of $8.15 per share on revenue of $55.5 billion.
However, if a one-time tax benefit of $8 billion is discounted, the company's earnings per share would only have been $7.31. The company also anticipates that revenue for the current quarter will be somewhere in the region of $58 billion to $61 billion.
Increased Spending on AI
In addition to the financial results, investors were keen to learn about the company's future investment plans. The report revealed that while overall company costs are anticipated to remain steady, there will be an increase in capital expenditure related to AI investments.
Following these revelations, the tech company's stock dropped over 8% in premarket trading.
The firm also revealed that its 2026 capital expenditure (capex) spending is expected to be between $125 billion and $145 billion. This represents an increase on its previous forecast of $115 billion to $135 billion. Despite this, overall expenses are anticipated to stay constant, reaching between $162 billion and $169 billion for the year.
On Wednesday, the company stated that the increased capex forecast is due to expectations of higher component pricing this year, along with additional data center costs to enable future capacity.
Year-On-Year Comparison
Looking back at the previous year, the company's spending forecasts for 2025 estimated total spending to be between $113 billion and $118 billion, with capital expenditures projected at $64 billion to $72 billion. The actual full-year costs for 2025 amounted to $117.7 billion, with capex spending peaking at $72.2 billion.
User Engagement and Ad Impressions
Aside from its financial results and spending plans, the company also disclosed that its daily active users across its various platforms had increased by 4% to an average of 3.56 billion as of March. This figure represented a slight decrease from the previous quarter, which was attributed to internet disruptions in Iran and restrictions on WhatsApp usage in Russia.
Ad impressions across the company's suite of apps rose 19% over the previous year. Simultaneously, the price paid per ad rose by 12%. Both figures represent an acceleration in growth compared to Q4. As of March 31, the company reported having a workforce of 77,986 employees.