Meta Revises Capital Expenses for AI Research as Legal Issues Loom: Implications for Investors

As the tech giant continues to invest more aggressively in AI research and product development efforts, it is revising its estimate of capital expenses. The company now expects expenses to be between $35 and $40 billion, which is $5 billion higher than the original estimate of $30 to $37 billion. Additionally, Meta’s full-year total expenses for 2024 are expected to be higher, with a range of $96 to $99 billion compared to the prior outlook of $94 to $99 billion.

This increase in expenses can be attributed to a number of factors, including product development and legal costs. Meta is currently facing legal issues such as an antitrust lawsuit and lawsuits from 33 states that allege the tech giant is negatively impacting children’s mental health. As a result, Reality Labs, a division of Meta that focuses on human-computer products through virtual reality headsets and augmented reality glasses, is expected to experience significant increases in operating losses due to ongoing product development efforts and investments aimed at scaling their ecosystem.

Analyst Max Willens noted that this adjustment in guidance is not surprising given that companies investing heavily in AI may face challenges with costs in the short term. However, he believes that Meta’s long-term potential for growth remains strong as it continues to invest in cutting-edge technology.