United States: Meta on Wednesday raised the lower end of its annual spending forecast and announced plans to introduce a new class of non-voting shares, as the company seeks to fund its expensive artificial intelligence expansion.
The company has been investing heavily in chips and data centres to compete more aggressively with OpenAI and Anthropic, putting pressure on its historically strong free cash flow.
The new shares could help Meta finance acquisitions and attract top talent without diluting chief executive Mark Zuckerberg's voting control, as competition in Silicon Valley's AI sector intensifies.
The parent company of Facebook and Instagram said it now expects capital expenditure of between $135 billion and $145 billion this year, compared with its previous forecast of $130 billion to $145 billion.
Meta also reported quarterly revenue of $64.60 billion, beating Wall Street estimates of $63.37 billion, according to data compiled by LSEG. Its forecast for fourth-quarter revenue also came in above market expectations.
Early interest in its consumer-focused AI agent Muse, along with the release of a competitive new series of AI models, has helped Meta justify its investments to investors. However, some enterprises are restricting the agent's access over security concerns.
Meta is also facing mounting legal challenges. Earlier on Wednesday, a judge in New Mexico ordered the company to pay a $25 billion penalty after a jury found that it had misled state residents about how it shared user data with third parties and enforced policies on hate speech and misinformation. The case was related to the British political consulting firm Cambridge Analytica.
In August, Meta agreed to pay as much as $18 billion over a decade and restrict teenagers' use of Facebook and Instagram to settle claims brought by nearly all US states, which alleged that the company's platforms were designed to addict children.
The agreement removed a significant regulatory hurdle that had weighed on Meta's stock and allowed the company to avoid a potentially lengthy trial that could have exposed further internal documents about its treatment of young users.
Almost all of Meta's revenue comes from advertising. Its Reels feature competes with TikTok and YouTube Shorts in the short-video market, while Threads challenges Elon Musk's X.
Meta is also using artificial intelligence to improve ad targeting and content recommendations, with the aim of increasing user engagement and strengthening its advertising business.