Mark Zuckerberg Is Making a Wild Bet on AI -- and It's Best Summed Up in This Single Quote

Shares of Meta Platforms (NASDAQ: META) took a big hit following the social media company's most recent earnings report, when Meta forecast massive spending growth (measured by both expenses and capital expenditures) in 2026. The commentary on spending growth marks a good time for investors to take a step back and reassess whether the company's growth strategy is sensible or too risky.

Sure, in the meantime, the company is firing on all cylinders. But with capital expenditures rising more than 100% in Q3 and expense growth expected to accelerate next year, the earnings growth algorithm is about to shift dramatically. Now investors will have to trust in Meta founder and CEO Mark Zuckerberg's vision -- because the sheer size and speed of the tech giant's infrastructure and AI (artificial intelligence) buildout means that the company is shifting into a period in which it's sacrificing profitability today in hopes of bigger profits later.

Fortunately, Zuckerberg has some contingencies if the best-case scenario for AI's long-term potential takes longer than expected or fails to materialize.

Capital expenditures are surging to build AI capacity

In its third-quarter update, Meta lifted its 2025 capital expenditures outlook to between $70 billion and $72 billion, up from a prior range that previously started at $66 billion, and said expense growth in 2026 will accelerate as the company expands AI infrastructure and adds technical talent.

But at least the quarterly backdrop was upbeat. Third-quarter revenue rose 26% year over year to $51.2 billion -- an acceleration from 22% growth in the second quarter, supported by higher ad prices and continued engagement gains. Across its family of apps, daily active users rose to more than 3.5 billion. And helping drive revenue growth, ad impressions increased 14% and average price per ad increased 10%.

But here's where things get a little wild.

Meta Chief Financial Officer Susan Li said that the company expects the dollar growth in capital expenditures to be "notably larger in 2026 and 2025."

For context, the company's forecast for $70 to $72 billion in capital expenditures this year is up from just $39.2 billion last year. In other words, Meta is probably expecting to increase its capital expenditure outlays in 2026 by at least $45 billion, putting total capital expenditures for the year at somewhere around the ballpark of $115 billion or more.

And that's just part of the equation.

"We also anticipate total expenses will grow at a significantly faster percentage rate than 2025," Li explained in the company's third-quarter earnings call, "with growth primarily driven by infrastructure costs, including incremental cloud expenses and depreciation."

Given that Meta expects full-year 2025 expenses to grow at a rate of 22% to 24% year over year to between $116 and $118 billion, Li's comments likely imply around $150 billion or more in 2026 expenses.

Mark Zuckerberg's risky bet

What are Meta executives thinking? Well, it all boils down to Mark Zuckerberg's massive bet on superintelligence -- a strategy that is best summed up in the following quote.

"I think it's the right strategy to aggressively front-load building capacity so that way we're prepared for the most optimistic cases. That way, if superintelligence arrives sooner, we will be ideally positioned for a generational paradigm shift and many large opportunities." Zuckerberg said during Meta's third-quarter earnings call.

What's Zuckerberg's fallback if the rise of superintelligence is slower than expected?

"If it takes longer, then we'll use the extra compute to accelerate our core business -- which continues to be able to profitably use much more compute than we've been able to throw at it," he explained.

The founder and CEO even has a contingency for a "worst-case" scenario. Not to worry, he says. In this case, the company simply built out new infrastructure in advance, allowing its core business to grow into it over time, he reasons.

Meta has the balance sheet to take risks

On the surface, Meta's big spending may sound extraordinarily risky. But I'd say it's just a moderate risk when viewed over the long term and in the context of the company's financial wherewithal. Still, it is a risk nevertheless.

Driving home what makes the risk bearable is the company's lucrative economics and its cash-rich balance sheet. Even with capital expenditures rising more than 100% in Q3, the company generated nearly $11 billion in free cash flow. Further, Meta boasts a net cash and marketable securities position (cash and marketable securities minus debt) of nearly $16 billion. As long as Meta continues to generate positive free cash flow and maintains a net cash position on its balance sheet, I think it's OK for the company to build out its infrastructure in advance, giving it optionality for a potential future with a superintelligence.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.