Shares of social media giant Meta Platforms (NASDAQ: META) have fallen about 28% from their 52-week high near $796, trading about $577 as of this writing. The slide has come even as the company’s core advertising business grows at its fastest pace in years.
So what’s bothering investors?
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Spending. Meta now plans to spend between $125 billion and $145 billion on capital expenditures in 2026, up from about $72 billion last year. Most of it is going toward the computing power behind artificial intelligence (AI), and it has drawn the same doubt circling Meta’s megacap peers: whether all that money will ever earn its keep.
It’s a fair question. And the clearest place to look for an answer is the very ad business that’s funding it.
Image source: Getty Images. A bigger bill
When Meta reported first-quarter results in late April, it raised its 2026 capital expenditures forecast to a range of $125 billion to $145 billion, up from a prior range of $115 billion to $135 billion. Set against the $72 billion the company spent in 2025, this year’s plan amounts to a near-doubling. Shares fell about 7% on the news.
“Most of that is due to higher component costs, particularly memory pricing,” Meta CEO Mark Zuckerberg said of the increase on the company’s first-quarter earnings call. In other words, pricier chips and memory — not a far bigger build-out — explain much of the step-up.
The deeper worry is what the spending does to profits. As today’s outlays convert into depreciation over the next few years, they will press on margins. Meta’s first-quarter operating margin held at 41%, but the heaviest depreciation is still to come.
The spending also sits atop an expensive side venture in reality labs — the division behind Meta’s virtual-reality headsets and AI glasses, which lost about $4 billion in the quarter. And new cloud and infrastructure deals added $107 billion to the company’s future contractual commitments during the period.
What the ad business is already showing
And the same investment drawing criticism is already lifting the two things that drive Meta’s revenue: how much people use its apps, and how much advertisers will pay to reach them.
On engagement, ranking improvements lifted time spent on Instagram Reels 10% in the first quarter, while total video time on Facebook rose more than 8% globally — its biggest quarterly gain in four years. AI is also surfacing fresher posts, with same-day content now making up more than 30% of recommended Reels on both apps — double the level of a year ago.
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