Meta’s AI splurge rattles investors
Meta's decision to join the AI race is driving investors away


Meta Platforms has suffered its second-worst daily loss in market value on record.
Part of the reason for last month’s 15% slide was that while Meta eclipsed forecasts for first quarter profits and sales, its outlook for the second quarter disappointed, says Jack Denton in Barron’s.
But the main problem was that the owner of Facebook “shocked” investors with plans to “spend even more aggressively on artificial intelligence [AI]”. It raised forecasts for full-year capital expenditures to between $35bn and $40bn, up from between $30bn and $37bn.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The money will go towards “ambitious AI research and product development”. Meta’s decision to bet on AI to this extent has undermined the “hard work the company has done to convince the market it has a tight rein on the purse strings”, says Russ Mould of AJ Bell.
It has also “reawakened” concerns about “a lack of discipline” from CEO and founder Mark Zuckerberg only a few years after he opted to spend large sums on the Metaverse, a punt on virtual reality that will take years to pay off (if it ever does).
What’s more, even if the investment proves the correct decision, the fact that Meta feels the need to engage in “an AI arms race” is worrying.
Are investors pulling away from the AI boom?
Meta’s pivot to AI is clearly “not going well”, says Robert Cyran on Breakingviews.
Still, that doesn’t mean that investors’ appetite for AI in general is waning. They are more upbeat about Microsoft’s capital expenditure, mostly on AI, tripling to more than $40bn this year.
The difference? Unlike Meta, Microsoft is also a “shovel merchant” in this gold rush, thanks to its Azure cloud platform, used by firms like OpenAI to train and run AI systems. Azure’s sales rose by 31% in the first quarter, with the Intelligent Cloud division Microsoft’s “biggest and fastest growing”.
It seems that for now, “investors are more keen to reward the toolmakers than the speculators”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
-
Two thirds of easy access savings accounts come with restrictions – can you access your savings in an emergency?
Out of the top 30 easy access savings on the market, 22 come with some sort of restriction on how fast you can access your money, according to new research.
-
Most popular London boroughs: Full list of in-demand places to move to
A deluge of people move to or within Britain’s capital each year – but which area is the most popular? We look at the most in-demand London boroughs in 2025.
-
Global investors have overlooked some of China’s best growth stocks
Opinion Dale Nicholls, portfolio manager, Fidelity China Special Situations, highlights three Chinese businesses where he’d put his money
-
How Next defied the odds and positioned itself as a British high-street staple
Next rose from a near-death experience and now thrives as a high-street staple. What's driving its success – and should you invest in the retailer?
-
Alok Sama on AI and how to invest in the future of technology
Interview Alok Sama, the former president and chief financial officer of Masayoshi Son’s investment vehicle SoftBank Group International, explains AI’s potential
-
The private equity puzzle
Listed private equity trusts still trade at large discounts, despite sales that validate their valuations
-
Why investors should avoid market monomania
Opinion Today’s overwhelming focus on US markets leaves investors guessing about opportunities and risks elsewhere
-
Can Rachel Reeves save the City?
Opinion Chancellor Rachel Reeves is mulling a tax cut, which would be welcome – but it’s nowhere near enough, says Matthew Lynn
-
Is Nvidia overvalued?
Nvidia is the world’s largest company and the first ever to be worth over $4 trillion. But despite being the undisputed leader in artificial intelligence, can it justify this valuation?
-
Pierre-Édouard Stérin wants to make France great again
Conservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous