SAN FRANCISCO - Facebook-parent Meta reported profits on Wednesday that fell short of Wall Street expectations, as the cost of staying in the race to deploy artificial intelligence -- along with hefty legal and severance charges -- hurt its bottom line.
The social media giant said net income dropped 14 percent from a year earlier to $15.8 billion.
Revenue, however, climbed 28 percent to $60.8 billion, beating estimates and underscoring the continued strength of its advertising business.
Shares in Meta were down as much as 12 percent in after-hours trading, a sign of analyst skepticism over the scale of the company's AI spending.
Its results contrasted with those of Microsoft, another tech giant that has faced investor doubts but beat analyst expectations on Wednesday, driven by its cloud and artificial intelligence businesses.
At Meta, the profit decline was driven largely by one-time items, including $2.4 billion in charges tied to legal proceedings and $1.2 billion in severance from a round of layoffs in May.
Meta has been fighting court and regulatory battles around the world, including one in which a California jury in March ordered Meta and Google to pay $6 million to a 20-year-old woman who said the platforms had addicted her as a child.
The decision was a first-of-its-kind verdict that could be echoed in thousands of similar cases against Meta still pending.
Meta reaffirmed that it would keep spending heavily on the data centers and chips underpinning its AI effort, telling investors it now expects capital expenditures of $130 billion to $145 billion this year -- nearly double what it spent in 2025 and slightly higher than its last forecast.
"AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities," chief executive Mark Zuckerberg said in a statement.
- AFP