Mark Zuckerberg Defends Meta’s AI Investment: “We’re Seeing the Returns”

Meta CEO Mark Zuckerberg is doubling down on artificial intelligence, reiterating his stance that aggressive investment outweighs the risk of underfunding the burgeoning technology.

During the company’s third-quarter earnings call on Wednesday, Zuckerberg addressed Meta’s substantial capital expenditure this year, highlighting the $14.3 billion allocated to Scale AI. This investment forms a cornerstone of Meta’s strategy to bolster its AI capabilities under the newly restructured Superintelligence Labs.

While Meta anticipates significant returns from AI integration across its platforms, some analysts express concern about the escalating AI spending race, particularly as competition intensifies with OpenAI and others. This raises questions about a potential valuation bubble in the AI sector, driven by the high capital expenditure and uncertain monetization strategies.

To power its innovative AI models, Meta is aggressively expanding its data center infrastructure and forging strategic cloud-computing partnerships with industry giants such as Oracle, Google, and CoreWeave. These deals provide Meta with the computing muscle necessary to train and deploy increasingly complex AI models.

Zuckerberg noted a recurring “pattern” suggesting that Meta’s AI ambitions will demand even greater computing power than initially projected. He remains confident that these escalating investments will generate substantial long-term returns.

“Being able to make a significantly larger investment here is very likely to be a profitable thing over, over some period,” Zuckerberg stated during the call.

Beyond dedicated AI applications, Zuckerberg emphasized the potential to repurpose excess AI-related computing capacity to enhance Meta’s core recommendation systems, benefiting its family of apps and advertising services.

Meta has revised its capital expenditure expectations upwards, joining its competitors in signaling increased investment in AI infrastructure. The company now projects capital expenditures between $70 billion and $72 billion for the year, an increase from the previous guidance of $66 billion to $72 billion.

Alphabet also announced an increased capital expenditure range of $91 billion to $93 billion, compared to its previous estimate of $75 billion to $85 billion. Microsoft, after its earnings call, indicated that it expects an acceleration of its Capex growth in 2026, a revision upwards after previous projections of slowing expansion. This escalating investment underscores the intense competition for AI dominance among tech giants.

Market reaction to these announcements was mixed. Alphabet’s stock experienced a 6% surge in extended trading, while Meta shares declined by approximately 8%, and Microsoft dipped more than 3%. This divergence reflects investor uncertainty surrounding the short-term implications of such heavy AI investments, particularly concerning profitability and the potential for diminishing returns.

Looking further ahead, Zuckerberg suggested that Meta could potentially offer excess computing power to third parties. He emphasized, however, that this is not a current priority.

“Obviously, if you got to a point where you overbuilt, you could have that as an option,” Zuckerberg said.

Zuckerberg also addressed the possibility of overcapacity, conceding that a “worst case” scenario could involve several years’ worth of excess data center capacity. While this would result in “loss and depreciation” of assets, he remains optimistic that the company would eventually “grow into that and use it over time.”

Meta’s sustained advertising growth, driven in part by AI-powered enhancements, fuels the company’s confidence in its investment strategy.

“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 said.

Third-quarter revenue reached $51.24 billion, a 26% increase year-over-year and surpassing analyst estimates of $49.41 billion. This growth represents the company’s fastest rate since the first quarter of 2024, highlighting the positive impact of AI integration on Meta’s core business.