Meta's AI Spending Surge: How Capex Growth Is Squeezing Profitability

Meta Platforms is spending at a scale few companies have attempted, pouring tens of billions of dollars a quarter into data centers, servers and networking gear to build out artificial-intelligence capacity. The company reports third-quarter 2026 results after the market closes on October 21, with a conference call scheduled for 1:30 p.m. PT / 4:30 p.m. ET, according to Meta's investor relations site. Investors are watching closely because the pace of spending has already reshaped — and in some quarters strained — the company's cash position and earnings.

From $72 Billion to as much as $145 Billion in One Year

Meta spent $72.2 billion on capital expenditures in 2025, according to a Yahoo Finance report on the company's spending trajectory. For 2026, Meta initially guided to $115–135 billion in capex, then raised that range to $125–145 billion after its first-quarter results on April 30, and narrowed it again to $130–145 billion after second-quarter results on July 29, according to an analysis by ValueAddVC based on Meta's own earnings disclosures. Each increase represents a roughly doubling of spending compared with the prior year.

The money is going into physical infrastructure. A Meta 10-Q filing with the U.S. Securities and Exchange Commission shows net property and equipment reached $225.7 billion as of June 30, 2026, up from $176.4 billion at the end of 2025, with $80.3 billion of that classified as construction-in-progress, primarily for data centers, servers and network infrastructure. The same filing describes a Louisiana data-center venture in which Meta holds a 20% membership interest, with roughly $27 billion in committed development costs and lease obligations of about $12.3 billion starting in 2029, as well as an El Paso, Texas project involving data-center assets with a $1.48 billion carrying value that Meta's board approved for contribution to a third-party co-development arrangement in the third quarter of 2026.

Capex, Debt and the Squeeze on Free Cash Flow

The SEC filing shows Meta spent $49.1 billion on property and equipment in the first half of 2026 while generating $64.1 billion in operating cash flow. Long-term debt rose to $83.7 billion as of June 30, 2026, from $58.7 billion at the end of 2025, after Meta issued $25 billion in new senior unsecured notes in May 2026, the filing states.

The cash crunch was most visible in the second quarter. According to ValueAddVC's summary of Meta's results, capital expenditures jumped to $31.1 billion in the quarter — up 57% from $19.8 billion in the first quarter — and consumed roughly 98% of operating cash flow of $31.86 billion, leaving free cash flow near breakeven. That compared with $12.4 billion of free cash flow in the first quarter, when capex was lower. Earnings per share came in at $6.18, below a consensus estimate of roughly $7.14 cited by ValueAddVC, and Meta shares fell nearly 8% in after-hours trading following the report.

The pattern repeated after first-quarter results. Meta's stock dropped more than 6% in after-hours trading on April 30, 2026, after management raised capex guidance, even as rivals Alphabet and Amazon — which reported the same day — saw their shares rise, according to Yahoo Finance. S&P Global analyst Melissa Otto was quoted saying investors were "getting a little frustrated at the amount of cash they're burning."

Why Wall Street Is Divided

Not all analysts see the spending as a warning sign. Truist Securities raised its price target on Meta to $1,000 from $763 on October 18, 2026 — a Street-high matching Wells Fargo's target — with analyst Youssef Squali citing early revenue traction from Meta's Muse AI agent, launched September 8, and projecting $28.5 billion in incremental revenue from Muse by 2030, according to Investing.com. Squali also forecast third-quarter revenue of $63.9 billion, at the high end of Meta's own $61–64 billion guidance range.

Other analysts are more cautious about the path ahead. Evercore ISI's Mark Mahaney said he expects capex growth in 2027 similar in dollar terms to the roughly $70 billion increase recorded in 2026, and warned that Meta's spending and total-expense guidance could come in "above the Street," according to Yahoo Finance, making it "probable" that 2027 earnings estimates get revised down.

Meta's chief financial officer, Susan Li, has repeatedly told investors the company retains flexibility to adjust future-year spending "to align with returns," according to ValueAddVC's reporting on her earnings-call remarks — a signal that the pace of investment could slow if AI products fail to generate proportional revenue.

What to Watch on October 21

Meta's third-quarter 2026 report will show whether the capex trajectory continues at the top of its $130–145 billion range and whether free cash flow recovers from the near-breakeven level seen in the second quarter. Analysts including Mahaney and Squali will also be listening for any formal 2027 capex guidance, since current figures — a $190–193 billion range cited by Truist and Wall Street consensus — remain estimates rather than company guidance.