Meta's AI Spending Strategy Faces Increasing Scrutiny
Meta Platforms' aggressive investment in artificial intelligence is coming under greater scrutiny as its financial position appears more strained compared to other major tech companies. The company anticipates capital expenditures of around $137.5 billion for the year, which analysts expect will push it into negative free cash flow later this year and potentially burn through over $20 billion next year. This spending is raising concerns among investors who are becoming less patient with high costs in AI infrastructure as tech giants continue to ramp up their investments. Meta's stock dropped 10% after-hours following a raised capital-spending forecast and missing profit expectations for the second quarter. While Meta’s ad business remains strong, growing by 28%, its reliance on advertising revenue alone is seen as risky given the scale of AI spending. The company has also significantly increased long-term debt to $83.7 billion since 2022, with additional off-balance-sheet obligations tied to data-center projects.