Meta Platforms Chief Executive Mark Zuckerberg on Friday called 2025 "the defining year of AI," saying the tech giant plans to invest between $60 billion and $65 billion in capital expenditures. That's more spending that analysts had forecast, but Meta stock still gained in Friday trading.
Zuckerberg unveiled Meta's big plans for AI in a Facebook post, predicting that "Meta AI will be the leading assistant serving more than 1 billion people, Llama 4 will become the leading state of the art model, and we'll build an AI engineer that will start contributing increasing amounts of code to our R&D efforts."
"To power this, Meta is building a 2 GW+ data center that is so large it would cover a significant part of Manhattan," he said. "We'll bring online (approximately) 1 GW of compute in 2025 and we'll end the year with more than 1.3 million (graphic processing units)."
Zuckerberg added that Meta will "invest $60 billion-65 billion in capex this year while also growing our AI teams significantly." Analysts expected Meta to publish its 2025 capex guidance with its earnings report next week. The number is closely watched by investors. The number came in ahead of analysts forecast of $51.4 billion, according to FactSet.
But investors appear to be shrugging off the larger-than-expected spending plans. On the stock market today, Meta stock gained 1.7% to close at 647.49. Shares broke out above 638.40 flat base buy point, according to MarketSurge.
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Meta has focused capex on data centers that can power the company's AI ambitions. Capital expenditures are already expected to have increased 40.2% year-over-year for 2024 to $38.3 billion. Meanwhile, the midpoint of Zuckerberg's range would mark a 60% increase in 2025 capex.
"We believe this capex range brackets the high end of investors' expectations (we think the buyside anticipated somewhere in the mid-$50 billion to low-$60 billion range), though given the initial positive stock reaction, we imagine plenty of folks were north of that range," Stifel analyst Mark Kelley wrote Friday.
Meta is still expected to give a total expense outlook for 2025 when it reports Q4 earnings late Wednesday. Kelley said investors are expecting around $110 billion for Meta's expense guidance.
Zuckerberg's Facebook post comes the same week that leaders from OpenAI, SoftBank and Oracle joined President Donald Trump to announce the potentially $500 billion Stargate AI infrastructure plan.
"We'd think (Zuckerberg's post) could arguably be viewed as something of a response to the Stargate announcement earlier this week to remind investors of its leading position in AI," RBC analyst Brad Erickson wrote Friday.
Piper Sandler analyst Thomas Champion added that Meta's overall business is "executing phenomenally well," allowing it to invest from a place of strength. But he added that the big capex plan likely indicates that Meta's free cash flow will be "flat-to-down" year over year in 2025.
"This was a smart move by Meta management to get ahead of the earnings call with announcement and inoculate the stock from a potential negative reaction," Champion wrote. "What we wonder is how well the stock digests the news once all the detail on the 4Q call is known. We cast a leery eye at model transitions and investment cycles, especially when FCF moves lower. Time will tell."
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Meanwhile, shares of Arista Networks gained a fraction to close at 129.16. Meta is one of the networking gear giant's biggest customers. Nvidia stands to gain from Meta's plan to buy more GPUs. But NVDA stock lost 3% to close at 142.62.
Meta stock has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Meta is also an IBD Leaderboard stock.
