Meta beat Q1 estimates—revenue up 33% to $56.3B, net income up 61%—but after-hours shares dropped 6–10%. The trigger: a revised 2026 capex forecast of $125B–$145B, up from $115B–$135B. CFO Susan Li cited higher memory chip pricing and additional data center costs. Q1 capex hit $19.84B, below consensus but signaling acceleration. The company has signed with AWS for Graviton chips, plus CoreWeave, Nebius, Google, Nvidia, AMD, and Broadcom. Superclusters Prometheus (Ohio) and Hyperion (Louisiana) will draw gigawatts; a $10B El Paso facility targets 1 GW by 2028.
On the workforce side, Meta will cut 8,000 jobs (10% of headcount) effective May 20 and scrap 6,000 open positions. Chief people officer Janelle Gale called it structural efficiency. This follows earlier cuts in Reality Labs and other units. Headcount stood at 77,986 as of March 31—up 1% YoY, but that’s reversing. CEO Mark Zuckerberg frames cuts as AI amplification: small squads replacing bloated teams, projects that took dozens of months now handled by one or two people in weeks. The company runs “AI Weeks,” tags workers as “AI builders,” and organizes into “AI pods.” Li added uncertainty: “I don’t really know what the company’s ideal head count looks like.”
Reality Labs continues to bleed—$4B operating loss in Q1. VR and AR hardware falter; Zuckerberg pivots to AI wearables. The unit lost 1,000 jobs in January. Total expenses guide to $162B–$169B for 2026, fueled by infrastructure and AI talent. Meta hired ex-Scale AI CEO Alexandr Wang as chief AI officer via a $14.3B stake and is offering $1.5B packages for single engineers. Muse Spark, a model from Meta Superintelligence Labs, showed early promise; Llama release delays persist.
User growth stuttered: family daily active people dipped 20M to 3.56B, blamed on Iran disruptions and Russia’s WhatsApp ban. Ad revenue held strong. Wall Street watches the clock—Big Tech (Meta, Microsoft, Alphabet, Amazon) dumped $133B in Q1 capex, up 70%, on pace for $725B yearly. Depreciation gnaws earnings; AI revenue remains sparse. Stock reaction erased $175B in market value. Polymarket traders give 84% odds for further tech cuts. Analysts split: some cheer discipline, others fear margin squeeze. Legal risks from youth social media backlash loom.
Zuckerberg’s bet: convert payroll into silicon and steel. 8,000 jobs gone, 6,000 frozen, $115B+ poured into infrastructure. Margins hold for now. 2026 will test whether the pipeline delivers returns—or becomes a stranded asset.
Source: Webpronews