Meta logs ‘milestone’ quarter, ups AI spending plan

Meta founder and CEO Mark Zuckerberg said the company had a “milestone quarter,” as the social media giant posted strong financial growth in the first quarter of 2026. Going forward, the company plans to increase its AI infrastructure investment.

The Instagram and Facebook parent has raised its 2026 capital expenditure guidance to a range of $125 billion to $145 billion, from the previous forecast of $115 billion to $135 billion. This aggressive spending is driven by the soaring costs of computer components, particularly memory, and a need to secure enough infrastructure to power the next generation of digital products.

“We are investing aggressively to meet our infrastructure needs and ensure we maximise our strategic flexibility over the coming years,” Chief Financial Officer Susan Li said, during the first-quarter earnings call.

Meta’s big tech peers Alphabet, Microsoft, and Amazon have also sharply increased capital spending to expand server and data centre capacity as AI-driven growth lifts computing demand, despite concerns about a potential AI bubble. Their combined capex expected to exceed $650 billion in fiscal 2026.

Meta’s financial health remains robust enough to support such investments. Its total revenue for the quarter grew 33% YoY to $56.3 billion. Net profit was reported at $26.8 billion, up 61%, though this figure was heavily influenced by a one-time tax benefit of $8.03 billion. Without this accounting boost, net profit would have been a more modest $18.7 billion. 

AI infra push

Since its founding in 2004, Meta has evolved from a simple social network into a global ecosystem that includes Instagram, WhatsApp, and Messenger.

Zuckerberg described this period as a historic technological transformation. The company is moving beyond two-dimensional screens towards immersive experiences powered by what he calls "personal superintelligence".

To achieve this, Meta has launched Meta Superintelligence Labs, and it recently released its first advanced model, Muse Spark. This model has already upgraded the Meta AI assistant, which Zuckerberg claims is now a world-class tool leading in areas like visual understanding and social content.

Immense infrastructure is required to run these models. Li highlighted this aspect during an earnings call. “Our experience so far has been that we have continued to underestimate our compute needs even as we have been ramping capacity significantly,” she said.

To address this, Meta is not only purchasing systems from traditional providers like NVIDIA but is also rolling out more than one gigawatt of its own custom silicon chips developed with Broadcom. It is also using significant amounts of AMD chips to complement its hardware stack.

The scale of this ambition is further evidenced by a $107-billion step-up in contractual commitments this quarter, driven by multi-year deals with third-party cloud providers to bridge the gap until Meta’s own data centres are fully operational.

There are several indicators that these AI investments are already yielding results in the core business. Ranking improvements on Instagram, powered by better data and more complex models, drove a 10% rise in the time people spent watching Reels. On Facebook, total video time increased by more than 8% globally, which is the largest quarterly gain in four years.

Furthermore, business messaging is growing, with weekly conversations between people and business AIs on WhatsApp and Messenger rising 10 times since the start of the year to over 10 million.

Personal superintelligence

Zuckerberg said his vision for AI is “very different”. He believes AI is going to amplify people’s ability to do what they want rather than simply replace them.

“We are on track to deliver personal superintelligence to billions of people,” he remarked.

His goal is to deliver personal agents that can understand a user’s goals and work day and night to help achieve them. This vision extends to the company’s hardware efforts too. The daily usage of AI-enabled glasses has tripled over the last year, making it one of the fastest-growing categories in consumer electronics.

“I’m also really excited to see the glasses evolve... to being able to be a personal agent that's with you all day long, helping you remember things and achieve your goals,” Meta's chief noted.

Zuckerberg also believes that, at some point, the models will have to improve themselves, rather than just learning from human input, to remain at the cutting edge of the industry.

Meanwhile, the Reality Labs segment, which handles the company’s virtual and augmented reality efforts, continues to report massive losses, losing $4.03 billion in the first quarter alone. The division reported $402 million in Q1 revenue, down marginally YoY.

Ads business

The social media company saw a 33% YoY growth in advertising revenue, its main source of income, at $55 billion in Q1. Revenue from the company’s family of apps—Facebook, Instagram, WhatsApp, Threads and Messenger—reached $55.9 billion, which includes advertising revenue.

The company saw a slight decline in Daily Active People in March, which reached 3.56 billion. This dip, according to Meta, was not due to a loss of interest but was caused by internet disruptions in Iran and blocks on WhatsApp in Russia.

Also, Li highlighted ongoing scrutiny regarding youth-related issues in the United States and new hurdles in the European Union that could impact how personalised ads are delivered.

The trade-off 

The push for AI dominance is also changing the internal structure of the company. Meta ended the quarter with 77,986 employees, a slight decrease from the end of 2025. Li confirmed that the company plans to reduce its employee base further in May 2026 to maintain a leaner operating model. This comes despite aggressive hiring for technical AI talent and infrastructure roles.

“We are seeing more and more examples where one or two people are building something in a week that would have previously taken dozens of people months,” Zuckerberg explained, adding that he wants Meta to be the best place for these high-impact individuals to work.