Meta Platforms, led by CEO Mark Zuckerberg, is planning a substantial investment of up to $65 billion (£559,051 crore) in artificial intelligence initiatives for 2025.
The funds will primarily be directed towards building a massive new data centre and expanding the company’s AI workforce, Zuckerberg revealed in a Facebook post on Friday.
The proposed data centre is set to be so expansive that it could occupy a significant portion of Manhattan. Meta aims to bring online approximately one gigawatt of computing power by 2025 and anticipates concluding the year with over 1.3 million graphics processing units (GPUs).
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“This is a massive effort, and over the coming years it will drive our core products and business, unlock historic innovation, and extend American technology leadership,” Zuckerberg stated.
Significant AI Investment
Meta has been heavily investing in AI over recent years, recently committing $10 billion (£86,440 crore) to a new data centre in Louisiana.
Additionally, the company has acquired advanced computer chips to support products such as its AI assistant and Ray-Ban smartglasses. Zuckerberg also highlighted plans to significantly expand Meta’s AI teams in 2025.
The announcement arrives shortly after OpenAI, SoftBank Group, and Oracle Corp. unveiled a $100 billion (£864,404 crore) joint venture, named Stargate, aimed at developing data centres and AI infrastructure across the US.
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Increased Capital Expenditure
Meta’s planned 2025 capital expenditure marks a 50% rise compared to its estimated spending for 2024, and more than double the amount allocated in 2023. The company is expected to release finalised 2024 capital expenditure figures when it announces its fourth-quarter earnings on 29 January.
Wall Street analysts had anticipated Meta would allocate $51.3 billion (£443,444 crore) for 2025, according to Bloomberg-compiled estimates.
While Meta shares initially dipped during pre-market trading following the announcement, they later rose by as much as 1.7% after markets opened in New York. Broadcom Inc., a key provider of chip design services to Meta, also saw its stock climb by up to 3.9%.
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Balancing Overspending and Strategic Positioning
Zuckerberg acknowledged concerns about potential overspending in AI, reiterating comments he made in July. “There’s a meaningful chance that a lot of the companies are over-building now,” he noted, “but the downside of being behind is that you’re out of position for the most important technology for the next 10 to 15 years.”
Unconventional Disclosure
The decision to share Meta’s spending plans on Facebook, five days ahead of the company’s quarterly earnings announcement, deviates from typical corporate practice.
Such projections are usually issued alongside financial results or via formal regulatory filings. However, federal regulators have ruled that social media platforms are suitable for companies to disclose material information to investors.
Robert Schiffman, Senior Credit Analyst at Bloomberg Intelligence, commented positively on the announcement. “Meta’s sharp increase in 2025 capital spending … may be its best use of capital, driving future growth and positioning itself as a leader in AI capabilities,” he remarked.
Source: With inputs from news wirers