Dive Brief:

• Facebook owner Meta is expecting “significant” capital expenditure growth in 2025 driven primarily by costs related to artificial intelligence infrastructure demands, according to CFO Susan Li.
• The tech giant’s capex for the full-year 2024 is projected to be in the range of $38 billion to $40 billion, up from the company’s prior estimated range of $37 billion to $40 billion, Li said during a Wednesday earnings call.
• “Overall, I'd say we're growing our infrastructure investments significantly this year, and we expect significant growth again in 2025,” she said.

Dive Insight:

Ballooning AI expenditures at Meta and other big tech companies are coming under increased scrutiny from Wall Street.

Meta stock was down more than 4% on Thursday closing at $567.58 per share, even though the company reported strong Q3 revenue gains just a day before.

“Uncertainty related to 2025 investment growth will likely limit near-term margin expectations despite the company's 3Q beat,” Wedbush analysts said in a Thursday report shared with CFO Dive.

Meta’s total revenue for the third quarter ended Sept. 30 was $40.6 billion, an increase of 19% year-over-year, according to results released Wednesday. Capital expenditures including principal payments on finance leases were $9.2 billion.

“It's clear that there are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years,” Meta CEO Mark Zuckerberg said during the Wednesday earnings call. “So, I think we should invest more there.”

Wedbush analysts said Meta’s increased AI investments are “justified given the benefits AI is already bringing to the business. The investments are driving improvements in the core business “as AI-driven feed and video recommendations have increased time spent on Facebook and Instagram this year by 8% and 6%, respectively,” the report said.

Meanwhile, Alphabet reported this week that its Q3 capex hit $13 billion. Much of that spending came from investments in “technical infrastructure,” including servers, data centers and related equipment, the company’s newly-minted CFO Anat Ashkenazi said during a Tuesday earnings call, as previously reported by CFO Dive.