Meta is expected to spend a bigger share of its revenue on capex than ever before

Earnings season is in full swing and this week is one of the biggest, with five of the Magnificent 7 — Amazon, Apple, Alphabet, Microsoft, and Meta — reporting over the next two days.

One area investors will be laser-focused on is AI, particularly regarding the amount of capital expenditure, or capex, each will be laying out on property and equipment like massive data centers for the rest of the year and beyond.

Meta, which reports after the bell tomorrow, has been pouring billions into data centers to power its AI ambitions — and traders, for now, are going along.

Analysts surveyed by FactSet expect Meta’s third-quarter revenue to jump 22% year over year to $49.5 billion. Meanwhile, its spending on property and equipment is projected to surge 123% to $18.4 billion, surpassing its anticipated net income of $17.1 billion.

That would push Meta’s capital expenditure to roughly 37% of revenue, up from about 20% a year earlier — its highest capex-to-sales ratio on record, as we’ve charted.

The spending spree shows no sign of slowing: Wall Street predicts capex will approach $97 billion in 2026, while Meta has outlined plans to invest $600 billion in US data centers and infrastructure through 2028.

CEO Mark Zuckerberg recently told the “Access” podcast that “misspending a couple of hundred billion dollars,” while “very unfortunate,” would still be worth it to achieve superintelligence. “The risk, at least for a company like Meta, is probably in not being aggressive enough rather than being somewhat too aggressive,” he said.

The Takeaway

While investors will press Meta on how and when these AI investments will pay off, JPMorgan analysts who cover Amazon and Meta are optimistic on both hyperscalers’ upcoming results. They recommend traders position for strength — but not too much strength — from both stocks as investors react to the quarterly figures.