Meta Raises AI Spending as Debt and Control Mount

Meta raised the lower end of its 2026 capital-spending forecast to $135 billion on Wednesday, Oct. 21, directing more corporate money toward data centers, advanced chips and computing power as it competes with OpenAI and Anthropic. The people whose data and attention feed these systems don’t set the budget. Mark Zuckerberg does.

Who Controls the Billions

Meta expects to spend between $135 billion and $145 billion this year. Analysts had forecast $139.79 billion. Third-quarter capital expenditures hit $34.91 billion, up from $31.08 billion in the second quarter. Earlier in October, CEO Mark Zuckerberg told the “Cheeky Pint” podcast he’d been willing to bet up to $200 billion on AI before he knew the models would work.

The spending is already squeezing cash flow. Meta reported negative free cash flow of $2.12 billion in the third quarter, compared with positive $10.63 billion a year earlier. Long-term debt reached $80.9 billion last quarter, up from $58.7 billion a year earlier. The company has also arranged financing that doesn’t appear on its balance sheet, including a $50 billion Louisiana data-center deal funded by private-credit firms.

Meta plans to issue a new class of non-voting Class C common stock in January 2027, effectively creating a two-for-one stock split. The company says the shares would give it more options to raise financing, fund acquisitions and retain talent while preserving Zuckerberg’s control. The New York Times also reported that Meta could use the stock for employee compensation. A split lowers the price of individual shares and increases the number available to buy and sell. It doesn’t give workers a say in the company’s direction.

Users Pay, Executives Keep Control

Meta reported third-quarter revenue of $64.60 billion, up 26% from a year earlier and above Wall Street estimates of $63.37 billion, according to LSEG data. Its fourth-quarter revenue forecast of $73 billion to $76 billion also topped estimates. Costs and expenses climbed 68% from a year earlier to $51.61 billion. Profit came to $9.8 billion, compared with $2.7 billion a year earlier, when a tax charge affected results.

Meta reported diluted earnings per share of $3.83. Without a $9.89 billion charge tied to a child-safety settlement, earnings per share would have been $7.40; The Verge reported that income from operations would have reached $22.89 billion without the charge. In August, Meta agreed to settle claims by nearly all U.S. states that its platforms were designed to addict children. The Verge put the settlement amount at $17.1 billion, with Meta paying $5.3 billion if YouTube and TikTok implement stricter settings and safeguards for children, a step Meta also agreed to take. Reuters described the deal as worth as much as $18 billion over a decade and said it included restrictions on teenagers’ use of Facebook and Instagram.

The agreement cleared a regulatory hurdle and helped Meta avoid a potentially lengthy trial that could have revealed more internal documents about its treatment of young users. On Wednesday, a New Mexico judge ordered Meta to pay $25 billion after a jury found the company misled state residents about sharing user data with third parties and enforcing policies on hate speech and misinformation. The case involved British political consulting firm Cambridge Analytica.

The AI Rush Meets the Wall

Meta’s consumer AI agent Muse had more than 2 million daily users and 3 million downloads, according to Business Insider. The New York Times reported that it became the fastest-growing AI app since OpenAI’s ChatGPT in 2022. Some users told Business Insider they used Muse to plan trips and prepare for exams. At Meta’s Connect keynote in September, Zuckerberg said Muse “has a novel business model,” and added that Meta expected to profit by taking “a small fee from transactions.”

Anthropic introduced Claude Duet on Wednesday, an AI agent in an early test phase designed for work. The tool connects to more than 6,000 outside apps, including Canva and DocuSign, and can make purchases through Link or Shopify’s Shop Pay, though users must approve each purchase. Anthropic said it will show users what it plans to do before sending a message or making a payment. Stock trading and transfers between accounts remain blocked, even with approval.

Investors have grown anxious about debt issued by major AI companies and funding strains at CoreWeave and other riskier parts of the boom. Gartner forecasts that worldwide information-technology spending will rise 15% next year to $7.3 trillion in 2027. “We have the demand for AI-optimized servers going crazy. We have the supply not being able to keep up. We have AI servers doubling in price, and nobody’s slowing down on orders,” John-David Lovelock, distinguished VP analyst at Gartner, told the WSJ Leadership Institute.

Meta’s shares rose more than 4% in extended trading, Reuters reported. CEO Zuckerberg said, “Our investments are paying off, the core business is strong, and we’re seeing velocity across the board.” Chief financial officer Susan Li said Meta expects to “continue investing aggressively.” The people whose data, attention and daily routines power that bet aren’t the ones holding the controls.