Jan 28 : Meta on Wednesday forecast its annual capital expenditure to increase sharply, as the social media giant builds artificial intelligence infrastructure in the pursuit of superintelligence.

Shares of the Facebook and Instagram parent rose nearly 4 per cent in extended trading.

The company also said its total expenses will surge on infrastructure costs, which include third-party cloud spend, higher depreciation, and higher infrastructure operating expenses.

It expects annual capital expenditure to be between $115 billion and $135 billion, compared with $72.22 billion a year earlier. The company forecast 2026 total expenses to be in the range of $162 billion and $169 billion, up from $117.69 billion a year ago.

Meta's ad platform has remained its growth engine, allowing advertisers to automate and personalize their campaigns and help the company support its investments in AI infrastructure to achieve superintelligence - a theoretical milestone where machines could surpass human performance.

The company is laying off about 10 per cent of staff at its Reality Labs group, which has about 15,000 employees, as it redirects resources from some of its metaverse products to wearables.

The unit — which has accumulated more than $70 billion in losses since 2021 — includes Meta's ambitious metaverse bet that prompted the company to change its name from Facebook.

Meta is building several gigawatt-scale data centers across the United States, including one in rural Louisiana, a project U.S. President Donald Trump said would cost $50 billion. It would be large enough to cover a significant part of Manhattan.

To boost its energy infrastructure, Meta has partnered with companies such as Vistra, Oklo, and TerraPower that will position it as one of the leading corporate buyers of nuclear power in the world.

Meta recently appointed Trump ally Dina Powell McCormick as president and vice chairman in a bid to drive partnerships with governments and investors for its AI projects. Along with other senior executives she will also focus on the company's global fleet of data centers.

Last year, Meta signed contracts with Alphabet, CoreWeave, Nebius for additional compute power, signaling pressing need for capacity expansion due to internal constraints.

The spending spree has been prompted by Big Tech's rivalry in Silicon Valley's AI race, where Meta has stumbled after its Llama 4 model met with a poor reception. Now the company is betting on its new AI models, launched internally this month.

The holiday quarter results come as the company's Advantage+ automated advertising suite is gaining strong advertiser adoption due to its ability to streamline campaign setup and enhance return on ad spend, analysts have said.

In the past year, Meta launched ads on WhatsApp and Threads, creating direct rivalry with platforms like Elon Musk's X, while Instagram's Reels continues to jostle with TikTok and YouTube Shorts within the lucrative short-video market.

Meta expects annual capital expenditures to rise on superintelligence push

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