Meta Spends $38B on AI While Cutting 8,000 Jobs

Meta is firing 8,000 people and spending $38 billion in the same quarter. If that sounds contradictory, welcome to the company's 2026 investment thesis.

The Ad Machine Is Running Hot

When Meta reports first-quarter results after Wednesday's bell, analysts polled by LSEG expect revenue of $55.45 billion—a 31% jump from $42.3 billion a year ago. That would be the company's strongest quarterly growth since 2021. Earnings per share are pegged at $6.79.

Nearly every dollar of that comes from advertising. And here's the quiet story inside those numbers: Meta's AI investments are already paying off—just not in any new product. Smarter ad targeting, better feed algorithms, more precise audience modeling. The AI is making the old business work better, even as the company hunts for what comes after ads.

Wall Street has been patient. But patience has a timeline.

The Bill for Betting on AI

Capital expenditures for Q1 are expected to hit $27.63 billion, according to StreetAccount. For the full year, Meta guided between $115 billion and $135 billion—a figure that would have seemed surreal just three years ago.

The spending traces back to a strategic pivot Mark Zuckerberg made last June: a $14.3 billion investment in Scale AI, paired with the hiring of its CEO Alexandr Wang to lead Meta Superintelligence Labs. The mandate is direct—build proprietary models that can compete with OpenAI, Anthropic, and Google. Earlier this month, Meta debuted Muse Spark, its first foundation model.

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The timing adds another wrinkle. The U.S.-Iran war, which began in February, has sent oil prices surging—raising energy costs for data centers across the board. Meta, Alphabet, Amazon, and Microsoft are all reporting Wednesday, and all face the same uncomfortable question about whether their infrastructure spending projections still hold.

Cutting People, Buying Machines

Last week, Meta announced it's laying off roughly 10% of its workforce—about 8,000 employees—and canceling 6,000 open roles it had been recruiting for. It's the third round of cuts this year. January took out 1,000 workers in Reality Labs. March swept through Facebook, global operations, and sales.

The pattern is deliberate, not desperate. Zuckerberg is shrinking the human headcount to fund the machine buildout. Whether that trade-off pays off depends entirely on whether AI can eventually generate revenue—not just reduce costs.

Reality Labs, the AR/VR division, is expected to post an operating loss of $4.82 billion this quarter on just $488.8 million in revenue. The metaverse bet continues to bleed, yet Zuckerberg shows no sign of pulling back.

What the Earnings Call Actually Needs to Deliver

The ad revenue growth is baked in. What investors are really listening for Wednesday is whether Zuckerberg can articulate a credible monetization path for AI—not a vision, a roadmap.

Muse Spark is a proof of concept, not a product line. Can it anchor a B2B AI services business? A subscription tier? Or does Meta remain, structurally, an advertising company that happens to be spending like a semiconductor manufacturer?

That question has an answer forming somewhere inside Meta Superintelligence Labs. Whether Zuckerberg is ready to share it publicly is the real variable heading into Wednesday's call.