Meta Bets Corporate Future on AI to Secure Long-Term Dominance

Meta's AI spending surge is pressuring profit margins despite a revenue beat in the third quarter, as the social media giant navigates a high-stakes bet on artificial intelligence. The company reported $51.2 billion in revenue for Q3 2025, exceeding estimates, according to CNBC. It also raised its full-year capital expenditure (CapEx) guidance to $70–72 billion, up from $66–72 billion, as a GuruFocus preview noted. This marks a significant escalation in its AI infrastructure investments, with CFO Susan Li stating that 2026 spending will grow "notably larger" than 2025, Seeking Alpha reported.

The aggressive spending strategy has reshaped Meta's leadership structure. Vishal Shah, former head of the metaverse, was shifted to lead AI product management under Nat Friedman, while about 600 AI-division employees were laid off in a restructuring aimed at streamlining operations, The Economic Times and WebProNews reported. CEO Mark Zuckerberg defended the moves, arguing that accelerating AI infrastructure is critical to avoid being "constrained" by compute shortages in the coming years, Business Insider reported. "We're prepared for the most optimistic cases," he said, emphasizing the need to build capacity for potential breakthroughs in "superintelligence."

Financial pressures are mounting. Meta's free cash flow (FCF) dipped to $8.55 billion in Q2, as CapEx surged to $30.7 billion in the first half of 2025—more than double the prior year's figure, a GuruFocus preview noted. Li warned that employee compensation costs, driven by AI talent acquisitions, will become the second-largest expense driver in 2026, as previously reported by Business Insider. Meanwhile, a $16 billion tax hit from U.S. legislation was reported by The Economic Times, and regulatory risks in Europe and the U.S. have added to margin pressures, as Seeking Alpha noted.

The company's AI ambitions are global. In Pakistan, Meta expanded its AI assistant, Meta AI, to support Urdu, a move designed to broaden access to its tools, UrduPoint reported. Domestically, it has invested $14.3 billion in data-labeling firm Scale AI and secured $27 billion in financing for its Hyperion data center, according to The Economic Times. These efforts align with Zuckerberg's vision of achieving "personal superintelligence," a term he used to describe AI systems surpassing human capabilities, NewsBytes reported.

Investor skepticism persists. While Meta's stock gained 27% year-to-date, the earnings call saw shares dip 9% as analysts questioned the ROI on AI spending, as NewsBytes reported. Goldman Sachs and others pressed Zuckerberg on timelines for profitability, but he remained bullish, stating that even overbuilding infrastructure would allow the company to "grow into the extra capacity," as Business Insider previously noted.

The AI arms race shows no signs of slowing. With Big Tech collectively projected to spend over $400 billion on AI in 2025, The Economic Times observed, Meta's ability to convert its investments into scalable products will be key. As it races rivals like OpenAI and Google, the company's balance sheet remains resilient, ending Q3 with $47 billion in cash, the GuruFocus preview noted. Yet the path to profitability remains uncertain, with analysts like Gil Luria noting that while AI demand is "real," speculative spending and circular investments (e.g., Nvidia funding cloud providers) raise concerns, Business Insider noted.