Meta forecasts up to $135 billion capex for 2026, shares jump on strong ad revenue

Meta Platforms has significantly raised its capital spending outlook for 2026 as the company steps up its ambition to build artificial superintelligence, a move that investors welcomed amid continued strength in its advertising business, as per a report by Reuters.

The Instagram and Facebook owner said it now expects capital expenditure next year to be in the range of $115 billion to $135 billion, far above market expectations and nearly double what it spent in 2025. The increase is largely driven by higher infrastructure costs, including payments to third-party cloud providers, rising depreciation tied to AI data centres, and increased operating expenses linked to compute-intensive workloads.

Chief executive Mark Zuckerberg described 2026 as a pivotal year for the company. Speaking to analysts, he said Meta is focused on delivering highly personalised AI capabilities while reshaping how the company operates internally.

Meta’s aggressive spending plans were underpinned by a strong fourth-quarter performance. Advertising revenue, which remains the company’s core business, rose 24 percent year on year, helping Meta beat earnings expectations and issue a first-quarter revenue forecast above Wall Street estimates. The results sent Meta shares up sharply in extended trading.

Also read: Zuckerberg says 2026 will redefine how Meta works as AI reshapes teams and productivity

The company generated $58.14 billion in advertising revenue in the December quarter, up from $46.78 billion a year earlier. However, capital expenditure rose even faster, climbing 49 percent and contributing to a decline in operating margin as infrastructure costs accelerated.

After entering the AI race later than some of its peers, Meta has committed to catching up quickly. The company is investing heavily in large-scale AI data centres and compute capacity, aiming to reach what Zuckerberg has described as superintelligence, a theoretical stage at which machines outperform humans across a wide range of tasks.

To support its growing compute needs, Meta has signed capacity agreements with several external providers, including Alphabet, CoreWeave and Nebius. Despite these deals, the company expects capacity constraints to persist through much of 2026, according to chief financial officer Susan Li.

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Meta has been able to fund its AI ambitions largely through its advertising engine, which has benefited from AI-driven improvements in ad targeting and campaign automation. The company has also expanded monetisation across newer platforms, rolling out ads on WhatsApp and Threads, while continuing to compete aggressively in short-form video through Instagram Reels.

Market watchers said investors appeared comfortable with Meta’s strategy, given the strength of its core business. Analysts noted that while returns from generative AI investments may take time to materialise, the company’s advertising cash flows are currently strong enough to absorb the heavy spending.

Meta also forecast total expenses for 2026 in the range of $162 billion to $169 billion, up sharply from the previous year. The increase reflects higher infrastructure costs and rising employee compensation as the company continues to hire aggressively for AI roles, intensifying the competition for top talent in Silicon Valley.

For the first quarter, Meta expects revenue between $53.5 billion and $56.5 billion, well ahead of analyst expectations. The company’s results contrasted with those of Microsoft, which also reported a sharp rise in capital spending but saw its shares fall after delivering only modest growth in its cloud business.