Meta Stock Loses $175 Billion on Higher AI Capex Forecast
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- Meta shares dropped ~10% on Thursday, erasing ~$175 billion in market value — the stock's largest single-day percentage drop in roughly six months
- Meta raised its 2026 capex forecast to $125–$145 billion, roughly 7% above its prior January guidance of $115–$135 billion
- CFO Susan Li attributed the capex increase to higher memory-chip pricing and additional data center costs tied to AI infrastructure
- JPMorgan analyst Doug Anmuth downgraded Meta to Neutral and cut the bank's price target to $725 from $825, flagging intensifying full-stack AI competition and a more challenging path to returns
- Meta's Q1 revenue hit $56.31 billion, up 33% year-over-year — its strongest quarterly growth since 2021 — while net income reached $26.8 billion ($10.44 per diluted share), aided by an $8 billion one-time tax benefit from U.S. Treasury R&D guidance
- Meta's Q1 capex alone reached $19.8 billion, and ad revenue stayed strong as AI-powered content recommendations boosted engagement on Reels and video
- CEO Mark Zuckerberg defended the higher outlay on the earnings call, framing it as a vote of confidence in Meta's AI roadmap
Why it matters: Meta posted 33% revenue growth and $26.8 billion in net income for Q1, yet investors wiped out $175 billion in market cap over a $10–$20 billion bump in 2026 capex guidance — and JPMorgan downgraded to Neutral, explicitly citing 'a more challenging path to returns,' showing Wall Street is now actively pricing in skepticism about the ROI on Big Tech's AI infrastructure arms race.
