Meta Platforms slashed stock by 13.5% over the last year while boosting capital expenditures to $125–145 billion to fund AI. AI-driven ad model upgrades drove over 6% higher conversion rates and its value optimization suite now runs at a $20 billion annual revenue rate.
Management boosted capital expenditures to a record $125 billion–$145 billion for the coming period, up from prior forecasts and reflecting a strategic shift to fuel AI research and infrastructure.
In the first quarter, AI-driven enhancements to ad models produced more than a 6% conversion rate increase for landing page view ads, while generative AI video tools produced over 3% higher conversion rates during tests.
The value optimization suite now operates at an annual revenue run rate exceeding $20 billion, more than doubling year over year, and weekly interactions with business AIs on messaging platforms have grown tenfold since the start of the year.
Management has acknowledged underestimating compute requirements, raising the possibility of escalating costs without guaranteed payoffs for more experimental AI projects, which could pressure margins if not balanced by near-term ad revenue gains.
