Meta Platforms’ stock plunged over 12% on Thursday despite delivering stronger-than-expected third-quarter results, as investor skepticism mounted over the company’s soaring artificial intelligence (AI) spending. The social media giant reported adjusted earnings of $7.25 per share on $51.24 billion in revenue, surpassing analyst expectations. Revenue rose 26% year-over-year, driven by robust ad performance and continued growth in its core platforms. However, the market reaction was negative due to Meta’s revised capital expenditure (capex) guidance, now projected at $70 billion to $72 billion for 2025—up from the previous range of $66 billion to $72 billion. This marks a significant increase in planned AI infrastructure investments. CEO Mark Zuckerberg defended the aggressive spending during the earnings call, asserting that early returns are already visible in Meta’s core business. He emphasized the company’s strategy to “aggressively” build AI capacity in anticipation of a future shift toward superintelligence, positioning Meta to capitalize on a potential generational technological transformation. To support this vision, Meta has made major moves in the AI space, including a $14.3 billion investment in AI startup Scale AI and the recruitment of its CEO, Alexandr Wang, to lead Meta’s new Superintelligence Labs. The initiative also includes former GitHub CEO Nat Friedman, signaling a strong push to integrate AI across its product ecosystem. Meta’s AI ambitions are part of a broader industry trend. Competitors like Alphabet and Microsoft have also raised their capex forecasts, with Alphabet now targeting $91–93 billion and Microsoft signaling continued high spending growth. These investments reflect a fierce race to dominate next-generation AI infrastructure, including data centers, custom chips, and cloud services. Meta has also expanded its cloud partnerships to accelerate AI deployment, further underpinning its long-term strategy. A key factor affecting the financials was a one-time $15.93 billion tax charge linked to the implementation of the “One Big Beautiful Bill Act” under former President Donald Trump, which impacted Meta’s net income. While the charge was expected, it added to the pressure on investor sentiment, especially amid concerns about the return on massive AI investments. Industry analysts remain divided. Some, like those at JPMorgan, acknowledge Meta’s strong fundamentals and leadership in AI adoption but warn that sustained high capex could strain margins if returns lag. Others argue that Meta’s proactive stance may yield long-term competitive advantages, particularly in AI-driven advertising and user experience. The company’s ability to balance innovation with profitability will be critical in the coming quarters. With AI becoming a central pillar of digital infrastructure, Meta’s strategic bets could define its future—though the market is clearly demanding proof of value.