Meta Bumps Up Capital Expenses by $5 Billion to Fuel AI Investments and Product Development Efforts

Meta, the tech giant, is increasing its estimate of capital expenses as it invests more aggressively in AI research and product development efforts. The company expects expenses to be between $35 and $40 billion, which is $5 billion more than the original estimate of $30 to $37 billion. Meta’s full-year total expenses for 2024 are also expected to be higher, with a range of $96 to $99 billion compared to the prior outlook of $94 to $99 billion.

The increase in expenses is not only due to AI investments, but also from product development and legal costs. Meta is facing legal issues, including an antitrust lawsuit and lawsuits from 33 states alleging the tech giant is negatively impacting children’s mental health. The company predicts significant increases in Reality Labs’ operating losses as a result of ongoing product development efforts and investments to scale their ecosystem.

Reality Labs, a division of Meta focusing on human-computer products through virtual reality headsets and augmented reality glasses, is a key contributor to the higher expenses. Analyst Max Willens noted that it’s not surprising Meta adjusted its guidance, as companies investing heavily in AI may face challenges with costs in the short term. However, he also pointed out that these investments could lead to significant growth opportunities for the company in the long run.