Meta shares dip as AI ambitions clash with rising investment costs

Meta Platforms saw its shares fall roughly 3% in pre-market trading as the market balanced the company's strong revenue numbers and upbeat sales outlook with the escalating costs of its AI push. Revenue topped forecasts and the firm expects fourth-quarter sales to exceed analyst estimates, driven by swift adoption of its Muse AI agent. At the same time, a New Mexico judge imposed a $25 billion penalty over a data-privacy case linked to Cambridge Analytica, which Meta intends to appeal.

The firm is budgeting $135-$145 billion in annual capital expenditures to fund AI, resulting in a $2.12 billion free-cash-flow shortfall versus a positive balance a year earlier. Deutsche Bank highlighted that AI spending is improving advertising results, and at least 13 brokerages have lifted their price targets following the earnings release. Meta also announced a new class of non-voting Class C shares to increase flexibility for acquisitions and employee compensation while keeping Mark Zuckerberg’s voting control.