April 29 (Reuters) – Meta Platforms raised its annual capital spending forecast on Wednesday, doubling down on its decision to plow billions into artificial intelligence infrastructure even as it seeks to cut costs with ‌planned layoffs.

The Facebook-parent projects 2026 capital expenditure between $125 billion and $145 billion, compared with its prior forecast of $115 billion ‌to $135 billion.

Shares of the company fell around 5% in extended trading.

The company also warned that legal and regulatory blowback in the EU and the ​U.S. “could significantly impact our business and financial results.”

“We continue to see scrutiny on youth-related issues and have additional trials scheduled for this year in the U.S., which may ultimately result in a material loss,” the company said.

REVENUE BEATS EXPECTATIONS

Meta reported first-quarter revenue of $56.31 billion, beating the LSEG-compiled analysts’ average estimate of $55.45 billion.

It expects second-quarter revenue of $58 billion to $61 billion, largely in line with ‌estimates of $59.5 billion.

Family daily active people (DAP), a ⁠metric Meta uses to track unique users who open any one of its apps in a day, rose 4% in the first quarter from a year earlier to 3.56 billion.

The results ⁠come weeks after Reuters reported first about Meta’s plans for sweeping layoffs, as CEO Mark Zuckerberg attempts to aggressively integrate AI into the company’s workflows and reshape its workforce around the technology.

Meta, which owns Instagram, WhatsApp and Threads, has been spending heavily on ​AI infrastructure ​and high compensation for employees such as those working in ​its Meta Superintelligence Labs, which released its first ‌AI model called Muse Spark earlier this month.

The company’s robust ad platform, which offers tools for automating and personalizing advertisers’ campaigns, has remained its growth engine and has helped support its investments in AI infrastructure.

Meta launched ads on messaging service WhatsApp and microblogging platform Threads last year, intensifying competition with platforms such as Elon Musk’s X. Simultaneously, Instagram’s Reels continue to jostle with TikTok and YouTube Shorts in the lucrative short-video market.

For the first time, Meta is projected to overtake ‌Alphabet as the world’s biggest online advertiser, with an expected $243.46 billion in ​global net ad revenue this year, excluding traffic acquisition costs. The forecast, ​by research firm Emarketer, puts the Google- and ​YouTube-parent’s annual ad revenue at $239.54 billion.