Meta's big AI spending blitz will continue into 2026

In this articleMETA your favorite stocksCREATE FREE ACCOUNTMeta CEO Mark Zuckerberg makes a keynote speech at the Meta Connect annual event, at the company's headquarters in Menlo Park, California, U.S

September 25, 2024.Manuel Orbegozo | ReutersMeta CEO Mark Zuckerberg plans to continue his company's artificial intelligence spending blitz well into the next year as rival giants do the same.Zuckerberg told analysts Wednesday during a second-quarter earnings call that AI's rapid pace of gress has informed much of Meta's recent decisions, including the company's $14.3 billion June investment into the data-annotating startup Scale AI as part of a revamped AI strategy involving a wave of high-file hires.AI's swift advancement warrants that Meta have "the absolute best and most elite talent-dense team" that can access the resources they need from a "leading compute fleet," Zuckerberg said the AI Superintelligence team he assembled for his company this summer

Whatever these top-tier AI reers build can then be implemented throughout Facebook, Instagram and the rest of the company's family of apps, he said."When we take a nology, we're good at driving that through all of our apps and our ad systems," Zuckerberg said. "There's no other company that is as good as us at kind of taking something and getting it in front of billions of people."Those AI endeavors, however, come at a cost

Meta on Wednesday said it expects its total expenses for 2025 to come in the range of $114 billion and $118 billion, raising the low end of its previous outlook of between $113 billion and $118 billion

And while Meta is still planning out next year, the company said its AI initiatives will "result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth."Other giants are also spending heavy on AI jects and talent.Alphabet said last week during its earnings report that it is raising its 2025 capital expenditures forecast to $85 billion, which is $10 billion higher from its prior forecast

Microsoft said Wednesday that its fiscal first-quarter capital expenditures will be $30 billion, ahead of analyst expectations of $24.23 billion.For now, investors are OK with Meta's big AI investments, with the company's s up nearly 12% in after-hour trading on Wednesday

It helps that Meta reported strong second-quarter earnings that beat on the top and bottom while viding third-quarter sales guidance that topped Wall Street expectations.It also helps that Zuckerberg said AI drove "greater efficiency and gains across our ad system," ly reassuring worried investors that Meta's big AI spending is leading to some immediate results.And while the company's Reality Labs unit continues bleeding money, posting an operating loss of $4.53 billion in the second quarter, the surprise hit of the Ray-Ban Meta smart glasses seems to have quelled investor discontent for the time being."I continue to think that glasses are basically going to be the ideal form factor for AI, because you can let an AI see what you see throughout the day, hear what you hear, talk to you," Zuckerberg said. "Once you get a display in there, whether it's the kind of wide holographic field of view, we showed with Orion, or just a smaller display that might be good for displaying some information, that's going to unlock a lot of value, where you can teract with an AI system throughout the day."WATCH: I Meta as a stock, don't love it, prefer Google.watch now3:3903:39I Meta as a stock, don't love it, prefer Google, says Evercore ISI's Mark MahaneyThe Exchange