Meta CEO Mark Zuckerberg defends AI spending: 'We're seeing the returns'

In a recent earnings call, Meta's CEO Mark Zuckerberg emphasized the importance of substantial investment in artificial intelligence, asserting that over-investing is preferable to under-investing. During the third-quarter earnings discussion, Zuckerberg detailed the company's significant expenditure of $14.3 billion on Scale AI, part of a strategic overhaul of its AI division, now referred to as Superintelligence Labs. Despite concerns from skeptics who fear that the excessive spending by Meta and rivals like OpenAI may create an unsustainable bubble, Zuckerberg remains optimistic. He indicated that to achieve advanced AI capabilities, Meta is expanding its infrastructure, including constructing extensive data centers and forming cloud partnerships with major players such as Oracle, Google, and CoreWeave. Zuckerberg pointed out a growing trend, suggesting that Meta's AI initiatives may require even greater computing resources than previously anticipated. He expressed confidence that the investments made in AI will yield significant returns in the long run. "Being able to make a significantly larger investment here is very likely to be a profitable thing over some period," he stated during the call. In light of these developments, Meta has revised its capital expenditure expectations for the year, now estimating between $70 billion and $72 billion, an increase from earlier projections of $66 billion to $72 billion. Competitors are following suit; Alphabet has raised its capital expenditure forecast to a range of $91 billion to $93 billion, and Microsoft is anticipating accelerated growth in capital expenditures by 2026. While Alphabet saw a surge in its stock price, climbing 6% in after-hours trading, Meta's shares experienced an 8% decline, and Microsoft's fell over 3%. Zuckerberg mentioned that if Meta ends up with surplus computing capacity, there is potential to lease it to third parties, although he noted that this isn't a current concern. He acknowledged the possibility of facing excess capacity in the worst-case scenario, leading to depreciation of certain assets, but he remains confident that Meta will effectively utilize its resources over time. Importantly, Meta's advertising division continues to thrive, bolstered by its AI advancements, with third-quarter revenue soaring 26% from the previous year to $51.24 billion, exceeding analyst expectations and marking the company's fastest growth rate since early 2024. "We're seeing the returns in the core business that's giving us a lot of confidence that we should be investing a lot more, and we want to make sure that we're not under-investing," Zuckerberg concluded.