Meta’s AI Investments Boost Capital Expenses Estimate by $5 Billion, Legal Issues Also Contributing

Meta, the tech giant, is raising its estimate of capital expenses as it continues to invest heavily in AI research and product development. The company now expects expenses to be between $35 and $40 billion, a $5 billion increase from its original estimate of $30 to $37 billion. In addition to AI investments, the increase in expenses is also attributed to product development and legal costs.

Meta is facing several legal issues, including an antitrust lawsuit and lawsuits from 33 states alleging that the tech giant is negatively impacting children’s mental health. The company predicts that significant increases in Reality Labs’ operating losses will result from ongoing product development efforts and investments to scale their ecosystem.

Reality Labs, a division of Meta focused on human-computer products through virtual reality headsets and augmented reality glasses, is a key contributor to the higher expenses. Analyst Max Willens noted that it’s not surprising Meta adjusted its guidance, as companies investing heavily in AI may face challenges with costs in the short term.