Meta's $100 Billion Bet on AI: Will Breakthroughs Surpass Economic Challenges?

Meta's shares dropped by 27% in recent sessions, highlighting investor concerns about the company's heavy spending on artificial intelligence infrastructure and its overall financial approach. This downturn comes amid a wave of increased AI investments by major tech companies, with

now alone. This mirrors a broader industry movement, as , Alphabet, and are also significantly boosting their investments in data centers and AI technology, this year.

Although this surge in investment is fueling economic expansion, it has also sparked worries about its long-term viability.

about 30% of revenue for these companies—three times the historical average—and could put pressure on cash reserves if returns fall short. For Meta, the challenge is heightened by its recent move into electricity trading to secure stable, long-term energy supplies for its data centers, for AI operations. Meta's global energy chief emphasized the importance of adaptable power agreements to attract developers of new energy projects.

Investor doubts have also grown due to Meta's off-balance-sheet financing of a $27 billion data center in Louisiana. The Wall Street Journal reported that Meta

with Blue Owl Capital, keeping a 20% stake while leasing the facility for up to two decades. This financial arrangement lets Meta keep the asset and related debt off its balance sheet, protecting its credit rating but raising questions about financial openness.

revealed he is leaving to start his own AI company, casting doubt on Meta's future innovation prospects. Even with a strong operating cash flow of $30 billion in the third quarter of 2025, due to rising infrastructure expenses.

Regulatory challenges are also becoming more prominent.

which postpones strict deadlines for high-risk AI systems, has introduced uncertainty for AI companies. At the same time, Meta is dealing with legal issues in Spain, where it was fined €479 million for breaching data privacy rules.

Despite the turbulence, some analysts maintain a cautiously positive outlook.

for Meta, highlighting innovations such as the Segment Anything Model 3, which speeds up AI-based content labeling. The bank holds a $900 price target, confident in Meta's potential to use AI for boosting ad revenue. However, rivals like Apple, which in fiscal year 2025—much less than Meta's competitors—are viewed as trailing in the AI competition.

Meta's strategic initiatives, including AI-driven advertising tools for the 2025 holiday season, underscore its efforts to automate marketing campaigns. Still, the tight schedule for holiday planning and dependence on algorithms may deter brands that prefer hands-on control.

As the AI investment race accelerates, Meta's challenge will be to balance innovation with sound financial management.

in 2026, the stock's rebound will depend on Meta proving its AI spending can deliver lasting profits.

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