Meta: Financing The AI Frontier
Deep Dives
Explore related topics with these Wikipedia articles, rewritten for enjoyable reading:
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Metcalfe's law
11 min read
The article discusses Meta's daily active user growth driving revenue. Metcalfe's law explains why network effects make each additional user exponentially more valuable, which is fundamental to understanding why Meta's user engagement metrics matter so much to investors.
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Graphics processing unit
15 min read
Meta's massive CapEx is largely directed toward AI infrastructure, which relies heavily on GPUs. Understanding GPU architecture and why these chips are essential for training large language models explains where Meta's billions are actually going.
From “Meta: The Decisive Period” (August 2025):
“It’s clear that this latest [CapEx] inflection is a bit different. That speaks not just to the magnitude of the expected spend, but also the purpose it serves for Meta – specifically, to directly improve their hand at FOA or for broader use cases… The risk / reward on the investment is starting to change as a result of these developments… I think Mr. Market will shrug this off if FOA’s results provide sufficient cover… If revenues disappointed in the face of huge expense growth, I think that Meta’s stock would likely face significant near term pressure. It’s up for each investor to determine how much influence considerations such as these should have on their decision-making.”
The encouraging news from Meta’s Q3 FY25 results is that the company continues to deliver impressive topline growth; revenues in the quarter were +26% YoY, with FY25 revenues likely to reach ~$200 billion, up more than 20% from the ~$165 billion generated in FY24. With sustained gains on daily active users and time spent, along with improved ad performance, the pieces are in place for mid-teens FY26e revenue growth, to ~$233 billion; in dollars, that’s nearly $70 billion higher than in FY24. (CFO Susan Li: “In the U.S., time spent on Facebook and Instagram grew double digits YoY, driven by video strength as well as healthy growth in non-video time on Facebook.”)
The problem is the breakneck pace of CapEx and total expense growth.
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