Meta Leans Into AI and Subscriptions to Future-Proof Its Ecosystem

Meta CEO Mark Zuckerberg said Wednesday (April 30) that the social media giant will increase its spending for artificial intelligence (AI) data centers this year as it embeds the technology more deeply throughout its family of apps.

“The major theme right now, of course, is how AI is transforming everything we do,” Zuckerberg said during an earnings call with analysts to discuss first-quarter earnings.

“The opportunities ahead for us are staggering,” Zuckerberg continued. “To that end, we are accelerating some of our efforts to bring capacity online more quickly this year, as well as some longer-term projects that will give us flexibility to add capacity in the coming years.”

Meta now plans to record $64 billion to $72 billion in capital expenditures, up from $60 billion to $65 billion. Meta CFO Susan Li said even with this additional spending, the company is having a “hard time” meeting demand for computing resources.

Asked whether Meta is sharing the cost of building data centers with other companies like AWS or Microsoft Azure, Li said Meta will continue to solely fund any training on its flagship large language model (LLM), Llama.

Zuckerberg’s plans in the near term include using AI to improve its ads for business, sharpening how they reach target audiences, and also using an AI agent that “delivers measurable business results at scale.”

Meta also sees opportunity in business messaging — people using WhatsApp and Messenger to conduct commerce. Zuckerberg said WhatsApp is now being used by more than 3 billion people per month and Messenger is being used by a billion people monthly.

“We see many businesses conduct commerce through our messaging apps,” Zuckerberg said. “There’s actually so much business through messaging,” with Thailand and Vietnam in Meta’s top 10 for revenue even though they rank in the 30s for global GDP.

This week, Meta released a standalone app for its Meta AI chatbot, which Zuckerberg said should compete with other AI chatbots as conversation buddies for users throughout the day.

The goal is for Meta AI to establish “leadership as the main personal AI that people use,” Zuckerberg said, adding that Meta still has work to do to get there.

The CEO said Meta remains on track to introduce an AI that can do the work of a midlevel software engineer sometime this year and scaling in 2026. He also sees AI agents or systems doing a “substantial” part of AI research and development by the second half of 2026.

Read more: EU Fines Apple and Meta for Digital Markets Act Violations

EU Troubles

Meta reported a 35% increase in net income for the first quarter ending March 30, to $16.6 billion, compared with the like quarter a year earlier. Earnings per share rose by 37% to $6.43 in the quarter year over year. Revenue rose by 16% to $42.3 billion.

In the quarter, Meta said family daily active people came to 3.43 billion on average, up 6% year over year.

Meta’s Reality Labs division, which develops its AR/VR Meta Quest headsets and Meta smart glasses, had an operating loss of $4.2 billion despite tripling sales for the smart glasses in the past year.

Even with Reality Labs’ big loss, Meta’s Q1 financial performance blew past Wall Street analysts’ consensus expectations, which were $41.4 billion for revenue and $5.24 per share in earnings.

Bank of America Global Research analyst Justin Post expected Meta to beat both his and Wall Street’s consensus expectations. In a research note shared with PYMNTS, Post wrote that he expected a “modest beat” to his revenue estimate of $41.2 billion. He also expected Meta to beat earnings expectations, given recent layoffs and focus on cost controls.

Looking ahead, Post said that slowing Chinese retailer spending in the U.S. and the uncertain macroeconomic environment are “likely” second-quarter headwinds.

Meta guided to $42.5 billion to $45.5 billion in revenue for Q2, including a 1% tailwind based on currency exchange rates. Total expenses will fall to $113 billion to $118 billion, from $114 billion to $119 billion.

Meta disclosed that it expects to see “significant impact” to its European business and revenue as early as the third quarter of 2025.

The European Commission has informed Meta that its business model offering paid subscriptions to avoid ads was “not compliant” with the EU’s Digital Markets Act. Meta said it will have to modify this business model as it appeals the EU’s decision.

Meta shares were up 5.8% to $581 in after-hours trading. Earnings were released after the bell.