Wall Street Reacts Negatively to Meta’s AI Spending Surge — But Not Everyone Agrees

Meta Platforms’ shares plunged in after-hours trading on Wednesday as investors reacted sharply to the company’s higher-than-expected expense guidance and a significant tax charge.

During its latest quarterly update, Meta — led by CEO Mark Zuckerberg — revealed that it plans to increase investments in artificial intelligence infrastructure, a move that many on Wall Street view as a hit to short-term profitability. However, long-term believers in Meta’s AI ambitions see this as a strategic step that could unlock substantial growth opportunities.

At the Meta Connect event held in Menlo Park, California, earlier this year, Zuckerberg showcased the company’s Ray-Ban Display AI glasses, underscoring Meta’s commitment to integrating AI into both consumer products and its core platforms. The glasses, which include built-in display technology, represent Meta’s broader vision of merging AI with augmented and virtual reality experiences.

Despite near-term cost concerns, analysts bullish on Meta argue that these AI investments are crucial for maintaining leadership in the next generation of computing. They believe that as AI-driven applications mature — from smarter ad delivery to advanced AR devices — Meta’s early spending could translate into significant long-term returns.

Still, the market’s immediate reaction tells a different story. Meta’s stock fell sharply following the announcement, reflecting investor unease over higher capital expenditures and uncertain timing of AI payoffs.

While Wall Street remains cautious, many tech analysts maintain that Meta’s aggressive AI expansion could be a game-changer, much like its early investments in mobile and social media a decade ago.