Meta Intensifies AI Competition with Billions in Investments

Meta (META) is escalating its involvement in the AI race. CEO Mark Zuckerberg recently announced plans to allocate billions to artificial intelligence development, construct an expansive data center, and unveil the Llama 4 foundation model. Despite the news, Meta's stock experienced a modest gain of less than 1%.

Zuckerberg disclosed in a Facebook post that the company will substantially increase its capital expenditures, dedicating $60-65 billion to expansion. This represents a significant jump from the $38-40 billion earmarked for the 2024 fiscal year.

Meta's earnings report is anticipated on January 29th. Zuckerberg outlined his vision for 2025, projecting that Meta AI will assist over one billion users and that Llama 4 will establish itself as the industry-leading model. Additionally, the company aims to develop an AI engineer that will contribute code to its research and development endeavors.

Central to Meta's expansion strategy is the construction of a massive 2-gigawatt data center, which Zuckerberg suggests could potentially encompass a sizable portion of Manhattan. By 2025, the company expects to complete a 1-gigawatt phase of the project, supported by an impressive 1.3 million GPUs dedicated to AI development. However, the precise location of the data center remains undisclosed.

In the competitive Silicon Valley landscape, Meta's AI efforts find it in an arms race with its rivals. Notably, the company's Llama models are open source, providing developers with access and flexibility in adapting the software.

Meta's competitors are not idle. Microsoft (MSFT) and OpenAI continue to release AI updates, including Operator AI, a browser-based agent capable of executing tasks. Oracle (ORCL), OpenAI, and SoftBank recently unveiled their $500 billion Stargate Project to establish AI data centers across the US. Google (GOOG) and Amazon (AMZN) are simultaneously expanding their respective AI platforms and investing heavily in Anthropic, a competitor to OpenAI. Google recently pledged an additional $1 billion investment to the company.