Mark Zuckerberg’s promise to deliver “personal superintelligence” fails to reassure Wall Street as the social media group raises its 2026 investment forecast by another $10 billion, even as an algorithm overhaul results in record time on Instagram and Facebook.
Meta Platforms lost around 7 percent of its share price in after-hours trading on Wall Street last night after the owner of Facebook, Instagram and WhatsApp jolted investors with another sharp increase in its artificial intelligence spending plans, even as a major algorithm overhaul led to record engagement on its apps.
The Mark Zuckerberg-led Silicon Valley group said it now expects capital spending in 2026 to be between $125 billion and $145 billion, up from the $115 billion to $135 billion range it forecast just months earlier. The revised forecast sent shares down $46.62, or 7 percent, to $622.50 in extended New York trading, even though first-quarter sales and profits comfortably exceeded City and Wall Street forecasts.
The reaction underscores growing shareholder alarm over Big Tech’s escalating AI arms race. The world’s biggest tech companies are investing tens of billions of dollars in data centers, custom chips and machine learning talent to avoid falling behind. This dynamic is increasingly determining the cost of doing business for smaller competitors and the digital advertising market on which countless British SMEs now depend.
Zuckerberg tried to reassure the market that the spending would pay off, arguing that Meta’s algorithm changes were already leading to stronger user loyalty and a more lucrative advertising business. The chief executive said improvements in content rankings increased “real time” spent on Instagram by 10 percent in the first quarter, while video engagement on Facebook rose more than 8 percent globally, marking the largest quarter-on-quarter increase in four years.
Susan Li, chief financial officer, told analysts that during that period, Meta doubled the length of user interactions used to train Instagram’s recommendation systems, allowing its AI models to “develop a deeper understanding of user interests.” The engineers had also accelerated the speed at which new posts appeared, using “more advanced content understanding techniques” to identify content that might appeal to a user “even if they haven’t engaged with a lot of similar content.”
More than half a billion users on Facebook and Instagram now consume AI-translated videos after the company began automatically dubbing clips into the viewer’s local language, a move aimed at expanding the pool of recommendable content and ultimately monetizable inventory. Across Meta’s family of apps, daily active users reached 3.56 billion in the first quarter.
The increased engagement flows directly into the advertising engine, which still generates the lion’s share of Meta’s revenue. Total ad impressions rose 19 percent year-on-year in the period, as the group’s automated, AI-powered ad platform, which enables brands to personalize campaigns at scale, continued to gain traction among marketers, including small and medium-sized advertisers, who increasingly make up the majority of their long-tail campaigns.
Zuckerberg used the earnings release to lay out his most ambitious vision for the technology yet, telling investors that Meta aims to develop AI agents capable of providing “personal superintelligence” to billions of people. He said he wanted Meta’s products to “deeply understand people’s goals and then be able to easily edit them for them and then check back,” whether those goals relate to health, learning, relationships or career.
“Literally every person in the world is going to want a version of this,” he said, suggesting that consumers would be “willing to pay a lot of money for premium or high-computing versions” — an indication that Meta is preparing to add subscription products on top of its traditional ad-supported model.
AI models, Zuckerberg added, would help Meta “develop a fundamental understanding of what you care about and what each piece of content in our system is about, so that we can show you more useful things for what you’re trying to achieve.”
However, the optimistic tone around AI remained worrying as the group plans to cut around 8,000 employees, or 10 percent of its workforce, in May. Pressed on whether the technology would ultimately replace human workers, Zuckerberg insisted his view differed from that of much of Silicon Valley.
“My view of AI is very different from many others in the industry,” he said. “I hear a lot of people out there talking about how AI will replace humans instead. I think AI will enhance people’s ability to do what you want, whether that’s improving your health, your learning, your relationships, your ability to achieve your personal career goals, and more.”
Li told analysts she was “uncertain about the optimal workforce size” for the company, but said management was committed to using AI tools to “significantly increase our productivity.” She added: “We are approaching this with the bias of wanting to use these tools to develop even more products and services than before. At the same time, we are making significant investments in infrastructure and are very focused on continuing to operate efficiently. So I think we will continually evaluate our structure to ensure we are best prepared for our priorities in the coming years.”
For all the capital spending fears, the underlying numbers were strong. Meta reported first-quarter revenue of $56.3 billion, above the Wall Street consensus of $55.58 billion. Net income rose 61 percent year-on-year to $26.8 billion, well ahead of analysts’ expectations of $17.2 billion, although the figure was flattered by an $8 billion tax benefit related to the U.S. tax reform package that took effect last July.
The question facing shareholders now is whether Zuckerberg’s extensive involvement in AI infrastructure will deliver the productivity gains and new revenue streams needed to justify the bill or whether, as some on Wall Street fear, the social media empire is about to open another costly chapter in the Metaverse playbook, only this time with a different acronym.
