Meta commits to $40B AI spend as profits face pressure
Photo by Julio Lopez (unsplash.com/@juliolopez) on Unsplash
Meta plans to spend up to $135 billion on capital expenditures this year, according to Fosstodon AI Timeline. The massive investment is part of a $635 billion AI infrastructure race among tech giants. This spending exceeds the entire GDP of Israel.
Quick Summary
- •Meta plans to spend up to $135 billion on capital expenditures this year, according to Fosstodon AI Timeline. The massive investment is part of a $635 billion AI infrastructure race among tech giants. This spending exceeds the entire GDP of Israel.
- •Key company: Meta
- •Also mentioned: Google, Amazon, Microsoft
The tech giant is pivoting resources from its virtual reality and Metaverse projects toward AI development. This strategic shift includes layoffs within its Reality Labs division, according to Simply Wall St News.
Meta is now heavily marketing its AI wearables portfolio, including smart glasses and standalone AI video platforms. The reallocation signals a major internal realignment of the company's priorities.
This spending is part of a much larger $635 billion capital expenditure race among tech titans. According to Fosstodon AI Timeline, this collective investment exceeds the entire GDP of Israel.
The "big four" – Amazon, Microsoft, Google, and Meta – are investing at an unprecedented scale. Their combined outlay also surpasses all global cloud infrastructure services revenue generated last year.
Online reaction to Meta's massive bet has been skeptical. One comment compared the AI investment to past high-risk bets like the Oculus acquisition, Fosstodon AI Timeline reported. The comment suggested the scale of AI investment could become a total loss on the company's books.
This skepticism underscores the uncertainty surrounding the rapid expansion of AI technology. Questions remain on whether the race for scale will deliver real value or leave costly consequences.
According to Reuters, Meta's shares surged following its updated spending plans. The company sharply boosted its annual capital expenditure forecast by 73% for AI development.
The company's stock was trading at $661.46 as it reorients its business. The market's initial reaction appears positive despite the significant financial commitment.
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