Meta Platforms Inc. has provided a disappointing revenue outlook for the current quarter, intensifying investor concerns about the company's unprecedented spending on artificial intelligence. The social media giant stated that third-quarter revenue is expected to be between $61 billion and $64 billion. According to Bloomberg-compiled data, the midpoint of this range falls below the analyst average estimate of $63.2 billion.
Meta relies on its advertising business to fund its costly AI products and infrastructure investments. Investors have consistently questioned how Meta will ultimately recoup its AI investments. Earlier this year, CEO Mark Zuckerberg unsettled the market by raising the spending plan to as much as $145 billion. On Wednesday, Meta narrowed its full-year capital expenditure forecast range to $130 billion to $145 billion, compared to the previous range of $125 billion to $145 billion.
Meta's shares closed at $585.61 in New York on Wednesday and fell about 6.2% in after-hours trading, down 11% year to date. Meta is one of the biggest spenders in the technology industry on AI data centers. This week, the company announced a partnership with BlackRock to build a data center campus in El Paso, Texas, with a total investment of $14 billion. Meta is also constructing another data center in rural Louisiana, with projected costs exceeding $250 billion.
Most of Meta's investment funds come from its advertising business on Facebook and Instagram. For the quarter ending June 30, Meta reported revenue of $60.8 billion, slightly above the analyst estimate of $60.3 billion. Emarketer senior analyst Minda Smiley wrote, "Meta's strong revenue growth will again be overshadowed by its capital expenditure forecasts. While Meta did not raise its forecast range, investors will not stop asking for more information about potential computing business plans and details on how Meta intends to commercialize AI."
Meta also faces other expenditures. According to a company filing, Meta narrowed its full-year expense forecast range to $165 billion to $169 billion on Wednesday, reflecting a $2.4 billion charge related to legal proceedings.