Zuck's convinced Wall Street to buy into Meta's AI spending blitz
Phil Rosen
Co-founder, Opening Bell Daily (185K+ subscribers) • Fulbright Alum • 2x Author • Founder, Journalists Club
Good morning, investors. The Fed surprised no one as it kept interest rates unchanged Wednesday, though two policymakers dissented against Jerome Powell in favor of a rate cut.
In today’s edition we’re turning to Big Tech — and the blowout earnings that outshined monetary policy.
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Meta the magnificent
Mark Zuckerberg is diverting more and more of Meta’s unlimited budget into AI and Wall Street just keeps applauding.
After trading closed Wednesday, the Facebook parent company reported blowout earnings that sent its stock 12% higher after hours:
Meta also slightly raised its capex guidance by $2 billion, and now expects to spend between $66 billion and $72 billion for the year.
Meta’s AI-fueled ad engine — bolstered by improved targeting and conversion rates — helped fuel the business and share prices over the last quarter.
Meanwhile, its novel smart glasses tripled sales compared to a year ago.
All of the above has helped Meta outperform most of its AI peers the last year with a 50% rally.
Notably, Meta CFO Susan Li addressed the company’s recent AI hiring spree, nodding to its hefty compensation packages for top talent.
"Aside from infrastructure, we expect the second-largest driver of growth to be employee compensation as we add technical talent in priority areas and recognize a full year of compensation expenses for employees hired throughout 2025,” Li said in a statement.
“We expect these factors will result in a 2026 year-over-year expense growth rate that is above the 2025 expense growth rate."
Investors, for their part, are now treating Meta’s massive spending as a calculated play, rather than a hype-driven gamble.
Zuckerberg’s $14.3 billion stake in Scale AI as well as his willingness to throw cash at new hires underscores Meta’s interest in dominating the AI race.
Those ambitions have coincided with actual revenue momentum, making it easier for Wall Street to buy into the vision and harder for analysts to question big spending plans.
Assistant Vice President, Wealth Management Associate
1wVery helpful
Ai has much less to do with it than Smart glasses, there is a hope that his AI can enhance them further but in the end it is the coupling of hardware and actual market traction that makes the valuation rise - hopes on the AI are just icing the cake, not the least since dividends have not and are not a concern for investors in that stock.