Meta reports 20 million user decline while doubling down on AI spending

Meta has disclosed a significant decline in its user base, reporting a loss of 20 million "Family daily active people" in the most recent quarter. The company attributes this drop primarily to external factors, specifically citing internet disruptions in Iran and access restrictions on WhatsApp in Russia. However, the aggregation of user data across Facebook, Instagram, WhatsApp, and Messenger means the specific impact on individual platforms remains unverified by independent analysis.

In a move that contrasts sharply with the user attrition, the company has announced plans to increase its artificial intelligence investments by $10 billion this year. This strategic pivot raises the total projected capital expenditures for 2026 to a range of $125 billion to $145 billion. Chief Financial Officer Susan Li described this adjustment as a necessary course correction, noting that the firm had previously underestimated the demand for compute resources and faced higher component pricing.

Financial results for the quarter showed a divergence between top-line growth and specific unit performance. Overall revenue surged by 33 per cent to reach $56.3 billion, marking the fastest growth rate for the company since 2021. Conversely, the Reality Labs unit, which develops virtual reality and wearable devices, recorded an operating loss of $4.03 billion. This unit has also faced significant headwinds, having undergone two waves of layoffs since January.

The market reacted negatively to the earnings release, with Meta's share price falling by more than 7 per cent. While the substantial rise in revenue suggests strong monetisation of existing users, the combination of declining daily active users and escalating capital requirements presents a complex outlook for investors. The company's reliance on future data centre capacity and the viability of its AI strategy amidst user churn will be closely scrutinised in coming quarters.