Zuckerberg says AI agent development slowed over 4 months

Meta Platforms Inc.'s push into artificial intelligence agents has hit a development snag, with Chief Executive Officer Mark Zuckerberg telling employees the technology has not "accelerated as we expected" over the past four months.

"Over the past four months, AI agent development has not accelerated as we expected," Zuckerberg said at an internal all-hands meeting, according to people familiar with the matter. He also said the company's 2026 organizational restructuring "could have been executed more cleanly."

The admission comes as Meta boosts its 2026 capital expenditures guidance to as much as $145 billion, a $10 billion increase announced in April, funded in part through a $25 billion bond sale. The company generates 98 percent of its revenue from digital advertising, where it has recognized most of the financial benefits from its AI spending through improved targeting and creative tools.

The development lag raises questions about the monetization timeline for Meta's multi-hundred-billion-dollar AI infrastructure bet. Meta's gross margin of 82 percent and operating margin of 41 percent are among the highest in technology, but any expansion beyond advertising — including a potential cloud computing business — would likely dilute those figures, analysts have warned.

Cloud Business Emerges as Diversification Play

Meta is exploring selling excess computing capacity to outside customers, according to Bloomberg News, a move that would put it in competition with Amazon Web Services, Microsoft Azure and Google Cloud. The company is debating whether to offer access to AI models hosted on its infrastructure or to sell raw computing power, people familiar with the matter said.

Zuckerberg said at Meta's annual shareholder meeting in May that a potential cloud business is "definitely on the table." The shift mirrors a strategy employed by Elon Musk's SpaceX, which has signed deals to offer computing capacity to Google and Anthropic worth more than $2 billion in combined monthly revenue.

Evercore analyst Mark Mahaney said Meta is unlikely to challenge the hyperscalers directly, instead following the path of so-called neoclouds such as CoreWeave and Nebius that offer AI-specific computing products. Shares of CoreWeave and Nebius both fell more than 10 percent on Wednesday following the Meta cloud report.

Investor Skepticism Meets AI Ambition

Wall Street has been watching Meta's spending trajectory with caution. The company's stock had fallen for four consecutive quarters before jumping 9 percent on Wednesday — its sharpest rally in more than five months — after news of the cloud push emerged.

Paul Meeks, head of technology research at Freedom Capital Markets, said the cloud move appears to be "a response to complaints that the company may be overspending and skepticism that Meta will ever earn a commensurate return on its capex." He added that anything Meta enters outside of online ads "would be dilutive to their business and would lower their margins."

Meta's AI spending has so far delivered returns primarily through its core advertising business. The company's ad platform has seen improved targeting capabilities and expanded creative tools for marketers. But the AI agent slowdown suggests that the next phase of monetization — autonomous agents that can perform tasks for users — may take longer to materialize than the company anticipated.

For investors, the key question is whether Meta can generate sufficient returns on its $145 billion capital expenditure before the next technology cycle shifts. Meta shares trade at roughly 22 times forward earnings, a discount to Microsoft's 30 times but a premium to Alphabet's 20 times, reflecting the market's uncertainty about the company's ability to diversify beyond advertising.

This article is for informational purposes only and does not constitute investment advice.