"Good morning. During earnings calls this week, the CFOs of big tech companies, Meta and Microsoft, delivered a similar message: the AI race requires unprecedented capital spending, but that spending is disciplined, demand-driven, and ultimately margin-accretive rather than reckless. The companies urged investors to look past headline numbers and focus instead on utilization, long-term economics, and visible revenue traction."
"Despite a "meaningful step-up" in spending, the company expects 2026 operating income in absolute dollars to exceed 2025 levels, even as operating margins may come under pressure, Li said on the company's Q4 2025 earnings call. She linked the higher investment to Meta's long-term superintelligence roadmap and to an expansion of data-center capacity required to support core AI workloads across advertising, ranking, and product development."
Meta and Microsoft are increasing capital spending significantly to support AI while framing that spending as disciplined, demand-driven, and ultimately margin-accretive. Meta guides 2026 capital expenditures of roughly $115–$135 billion, up from $72 billion in 2025, and expects 2026 operating income in absolute dollars to exceed 2025 levels even if operating margins compress. The investment funds data-center expansion for core AI workloads across advertising, ranking, and product development and supports AI-driven improvements in ad targeting, creative tools, and advertiser performance. Revenue guidance and advertiser momentum are cited as the primary basis for the spending plan.
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