Meta shares fall on concerns over AI spending, legal scrutiny

Meta Platforms raised its annual capital expenditure forecast on Wednesday, signaling plans to invest billions more in AI infrastructure. The announcement came as the company faces increased legal scrutiny and a potential decline in user growth due to a global youth backlash. Meta's shares fell on the news, reflecting investor concerns about the scale of spending and the regulatory environment.

The increased spending is part of Meta's broader push to expand its AI capabilities, including investments in data centres and computing resources. The company did not specify the exact amount of the increase, but described it as 'billions more' than previous forecasts. Meta has been under pressure from regulators in multiple jurisdictions, including investigations into data privacy and antitrust practices.

The youth backlash refers to reports of declining engagement among younger users, who are gravitating toward competing platforms. Meta faces the challenge of maintaining its user base while investing heavily in AI infrastructure, which may not generate immediate revenue. The company's stock decline indicates that some investors are skeptical about the short-term returns from these investments.