Meta Platforms (NASDAQ:META) shares came under pressure as investors assessed the company’s rapidly expanding capital expenditure plans and the financial requirements of its artificial intelligence strategy. The stock closed at $627.17 after declining 2.6% in the latest trading session, extending its losses to roughly 8% over the past five sessions.

The move comes as Meta prepares to sharply increase its spending pace through the remainder of 2026. Although the company continues to benefit from strong advertising momentum, investors are focusing on whether its large investments in AI infrastructure can generate returns sufficient to justify the higher costs. For large technology companies, AI spending is capital intensive because it typically requires data centers, networking equipment, and advanced computing hardware before the related products or efficiency gains are fully reflected in revenue.

AI Infrastructure Spending Draws Scrutiny

Meta expects total capital expenditures for 2026 to range from $125 billion to $145 billion, with the midpoint at approximately $135 billion. The projection marks a substantial increase from earlier spending levels as the company expands data centers, computing capacity, and other infrastructure required to support artificial intelligence development.

During the first quarter, Meta recorded capital expenditures of $19.84 billion. To reach the midpoint of its full-year forecast, the company would need to spend approximately $38.39 billion per quarter from the second quarter through the end of the year.

That pace would represent an increase of nearly 94% compared with the first-quarter spending rate. The planned acceleration has raised questions among investors about whether Meta’s aggressive AI investment strategy could pressure margins and constrain free cash flow in the near term. Higher infrastructure spending can also affect reported results over time through depreciation and operating costs associated with running large-scale data center capacity.

Meta has not provided a detailed breakdown showing how much of its capital spending is directly tied to AI. However, much of the company’s infrastructure expansion is linked to its effort to compete in artificial intelligence with rivals including Alphabet, Microsoft, and other major technology firms.

Earnings Report to Provide Further Detail

Meta’s upcoming second-quarter earnings report, scheduled for July 29, is expected to give investors a clearer view of how quickly spending is rising and whether revenue growth can absorb the additional costs.

Current market expectations point to quarterly revenue of about $60.21 billion. Earnings forecasts place adjusted earnings per share near $7.19 to $7.20. Meta has previously guided for revenue between $58 billion and $61 billion.

The company generated $12.39 billion in free cash flow during the first quarter, giving it some financial flexibility. Continued increases in infrastructure spending, however, could test Meta’s ability to maintain strong cash generation while funding its long-term AI strategy. Investors are likely to focus on any updated capital expenditure commentary, the timing of infrastructure deployments, and management’s discussion of how AI is being used across advertising tools, content ranking, and consumer products.

Advertising Business Remains a Key Support

Despite concerns about spending levels, Meta’s core advertising business continues to support its investment plans. First-quarter revenue rose 33%, aided by stronger advertising demand and improved pricing.

The company reported a 19% increase in ad impressions, while average advertising prices climbed 12%. Those figures show that Meta’s existing business remains strong and capable of helping finance its expansion efforts.

Some analysts remain constructive on the company’s longer-term outlook. Dominic Ball of Rothschild & Co Redburn recently raised his price target for Meta to $1,000 from $900 while maintaining a Buy rating, reflecting confidence that AI investments could eventually create significant value.

Investor caution has also been reinforced by broader industry developments involving Alphabet. The Google parent recently increased its 2026 capital expenditure forecast to between $195 billion and $205 billion, while also reporting negative quarterly free cash flow. The comparison highlights how the AI buildout has become a sector-wide issue for major internet and cloud companies, with investors weighing current cash outlays against the still-developing revenue contribution from AI products and services.