Meteoric levels of investment in AI infrastructure have sparked concerns that Big Tech’s latest boom is veering into bubble territory. So, is Meta, along with the rest of Silicon Valley, overspending on AI?

“Clearly no Meta executive would ever answer that question with a ‘yes,’” Alex Schultz, Meta’s CMO and VP of analytics, said in an interview with Business Insider at the Web Summit tech conference in Lisbon this week.

Meta plans to spend up to $72 billion this year on AI infrastructure and has indicated that spending will climb even higher next year. CEO Mark Zuckerberg stated earlier this year that he’d rather risk “misspending a couple of hundred billion dollars” than be late to the development of superintelligence.

Amazon, Google, Microsoft, and privately held AI companies like OpenAI are logging record-breaking capital expenditures on AI-related technologies. This includes investments in chips and data centers, as well as high salaries to attract and retain top AI researchers and engineers.

Despite the eye-watering sums, Schultz argued that, compared to historical bubbles, the current trend is not huge as a percentage of the sector’s market capitalization or revenue. Comparing it to the US railroad bubble of the late 19th century, he said, “It seems aggressive, but not crazy.”

In an October research note, Goldman Sachs analysts estimated that AI-related investment in the US is under 1% of GDP, which is lower than the 2% to 5% of GDP reached during earlier technology booms, including the railroad expansion.

Schultz also noted that Meta’s AI investments are already translating into billions of dollars in revenue by improving its advertising tools and content ranking algorithms. Meta is expected to generate around $200 billion in revenue this year and currently trades at a market cap of about $1.5 trillion.

He highlighted that the biggest AI-powered revolution for Meta has been its more sophisticated content recommendation system. This pivot was necessary because the majority of time spent on Facebook and Instagram is now devoted to “unconnected content”—content that isn’t from a friend or a page or group the user actively follows.

“If we hadn’t made that pivot, how much smaller would we be as a company today?” Schultz asked. “We managed a massive disruption without becoming irrelevant, and it is incremental to our business.”

Schultz also discussed Meta AI app’s newly released Vibes feed—a feed of short-form, purely AI-generated video content—which he believes represents “probably a large chunk of the future” for the company. So far, Vibes has demonstrated “good retention” among users once they try it, despite being panned by many online as “AI slop.”

Video-generation models require more computing power than text or image models, creating huge energy demands that could strain power grids and water supplies. The popularity of apps like OpenAI’s Sora has also sparked debates about whether the entertainment value justifies the environmental trade-offs.

“Vibes isn’t that big; it’s not draining lakes or using multiple nuclear power stations,” Schultz said. He added that Vibes is one of many experiments Meta is working on to train and learn from its AI models.

“There’s sort of this Western European Calvinist streak to society that’s like, doing nice things that are fun is not what life’s about,” Schultz remarked. “And life is about doing nice things that are fun, and we do all the other stuff so that we can do nice things that are fun.”

The AI wave has prompted what Schultz described as productive conversations about the safety of nuclear power stations and the use of desalination plants to produce freshwater from seawater.

“In general, humanity has the ability to have a lot more abundance than it does,” Schultz concluded.
https://www.businessinsider.com/meta-cmo-alex-schultz-defends-the-ai-spending-boom-2025-11