Meta Raises Capital Expenses Estimates by $5 Billion Amidst Legal Issues and AI Investments

Meta, the tech giant, is increasing its estimate of capital expenses as it continues to invest aggressively in AI research and product development efforts. The company now expects expenses to be between $35 and $40 billion, which is $5 billion more than the original estimate of $30 to $37 billion. This increase in expenses is not only due to AI investments, but also from product development and legal costs.

Meta is currently facing legal issues, including an antitrust lawsuit and lawsuits from 33 states alleging that the tech giant is negatively impacting children’s mental health. The company predicts significant increases in Reality Labs’ operating losses as a result of ongoing product development efforts and investments to scale their ecosystem. Reality Labs, a division of Meta focusing on human-computer products through virtual reality headsets and augmented reality glasses, is a key contributor to the higher expenses.

Analyst Max Willens noted that it’s not surprising that Meta adjusted its guidance, as companies investing heavily in AI may face challenges with costs in the short term. With these increased expenses, Meta’s full-year total expenses for 2024 are expected to be higher, with a range of $96 to $99 billion compared to the prior outlook of $94 to $99 billion. Despite these challenges, Meta continues to invest heavily in AI research and product development efforts in order to stay competitive in the rapidly evolving technology industry.