Meta Shares Decline Amid Increased AI Spending, Legal Scrutiny

Meta Platforms shares fell more than 6% in extended trading after the company increased its annual capital spending forecast, signalling more investment in artificial intelligence infrastructure.

Credit: UNSPLASH

The Facebook and Instagram parent projected 2026 capital expenditure between USD 125 billion and USD 145 billion, an increase from its prior forecast of USD 115 billion to USD 135 billion.

The company also warned that legal and regulatory blowback in the European Union and the U.S. "could significantly impact our business and financial results," following years of criticism about children's safety on social media.

Meta stated, "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 organisation faces a rising number of teen social media bans globally, as well as thousands of court cases by individuals, municipalities, states, and school districts. These lawsuits accuse Meta of designing addictive platforms harmful to children.

Several high-stakes court cases are due in the coming months, including the second part of a landmark New Mexico trial and a California case. The California case is expected to test claims central to nearly 2,000 similar lawsuits filed by U.S. school districts.

Meta reported its first-ever quarterly decline in Daily Active People (DAP) since it started using that metric to measure user numbers across its social media platforms. The company attributed this decline to internet disruptions in Iran and restrictions on WhatsApp access in Russia.

Daily active people grew 4% year-over-year in the first quarter to 3.56 billion.

Analyst Matt Britzman of Hargreaves Lansdown said Meta's higher capital spending spooked investors. He believes this is likely overblown, reflecting more expensive memory prices rather than changes to Meta's investment plan.

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

The company is planning further layoffs in the second half of the year, sources have told Reuters. Meta is also installing new tracking software on U.S.-based employees’ computers to capture mouse movements, clicks, and keystrokes to train its AI models.

This forms part of a broad initiative to build AI agents that can perform work tasks autonomously, Reuters reported last week.

Chief Financial Officer Susan Li confirmed the May layoffs on a conference call after reporting the financial results.

Li stated, "We don't really know what the optimal size of a company will be in the future. I think there's a lot of change right now, with AI capabilities advancing rapidly."

On the same call, Zuckerberg described tiny teams using AI to make products that previously would have taken dozens of people months to finish.

He said he wanted to build "the next evolution of our company around these people." This means investing in top-tier infrastructure, increasing rewards for heavy hitters, and streamlining teams so they are not bigger than they need to be.

Meta stated its workforce at the end of March was 77,986 people, up 1% from the same period last year but down from 78,865 at the end of December.

Reflecting anticipated savings, Meta kept its forecast for total 2026 expenses unchanged despite the projected rise in capital expenditure this year.

The company reported first-quarter revenue of USD 56.31 billion, beating the LSEG-compiled analysts' average estimate of USD 55.45 billion.

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

Managing director Gil Luria of D.A. Davidson noted that Meta’s results met expectations but "failed to impress investors, especially in the context of much stronger results from Google."

Luria added that investors were also concerned Meta's spending plans rose without a corresponding reduction in operating expenses.

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• Meta increased its annual capital spending forecast to between USD 125 billion and USD 145 billion for 2026.

• Shares fell more than 6% following concerns about AI infrastructure investment and legal scrutiny.

• The company faces legal and regulatory blowback in the EU and U.S. over youth safety and addictive platforms.

Source: REUTERS

Chinese Tech Firms Rush for Huawei AI Chips After DeepSeek V4 Launch

Demand for Huawei’s Ascend 950 artificial intelligence chips has surged following the release of DeepSeek’s V4 AI model, which runs on the Shenzhen-based tech firm’s semiconductors. Major Chinese internet companies are actively seeking to secure new orders for these chips.

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China’s largest internet firms, including ByteDance, Tencent, and Alibaba, are contacting Huawei about additional chip orders. Companies specialising in cloud computing and graphics processing unit rental services are also placing orders for the chips.

The 950PR chip significantly outperforms Nvidia’s H20 chip, which was the most powerful chip Nvidia was permitted to sell in China until its import was blocked. However, the 950PR still trails the American firm’s H200, a more advanced processor that is currently subject to regulatory uncertainty.

Despite obtaining export approvals from both the U.S. and China, the H200 has yet to be shipped to China. This delay is due to ongoing disagreements between Beijing and Washington regarding the conditions governing its sale, providing an opportunity for Huawei to sell its semiconductors.

The 950PR represents a significant breakthrough for Huawei after years of struggling to win large orders from China’s technology sector. Customer testing of the chip was successful, with firms including ByteDance and Alibaba planning orders after samples were distributed.

The heightened demand for Huawei’s chips underscores how the DeepSeek V4 release has boosted the need for domestic Chinese AI hardware. U.S. export controls continue to restrict access to Nvidia’s most advanced processors, further affirming the performance of Huawei’s chips.

DeepSeek’s decision to optimise its V4 specifically for Huawei’s chips marks a strategic shift away from American semiconductor dependence. This move aligns with Beijing’s priority of promoting China’s homegrown AI technology in pursuit of technological supremacy.

Huawei announced that its Ascend supernode infrastructure, built on the Ascend 950 series chips, fully supports DeepSeek V4 models. The entire Ascend SuperNode product line has been adapted for V4 inference, the process of using a trained AI model to answer queries and execute tasks.

Among Chinese chipmakers, Huawei’s Ascend 950 series, specifically the 950PR variant, is the only domestic chip to support a technique that processes AI calculations in a compressed numerical format. This allows it to handle more computations per second at a lower cost.

Alibaba Cloud’s Bailian platform made DeepSeek V4 available on the same day it was released, offering both the V4-Pro and V4-Flash variants at prices matching DeepSeek’s official rates. Tencent Cloud launched V4 preview services on its TokenHub platform concurrently.

Tencent deployed the model on both domestic nodes and its Singapore international gateway to serve global users. The rapid deployment by major cloud platforms means millions of users and developers can now access V4.

This access sharply increases the volume of AI queries that need to be processed, and with it, the demand for the underlying chips. DeepSeek is offering developers a 75% discount on its new model until May 5.

DeepSeek stated that V4-Pro pricing could decline significantly in the second half of 2026 once Huawei’s Ascend 950 supernodes ship at scale. However, the company acknowledged that supply constraints would persist until production increases.

These constraints reflect the tight supply of high-end homemade AI chips. Output of the 950 is expected to fall short of demand due to U.S. export restrictions on advanced chipmaking tools.

These restrictions prevent China from acquiring cutting-edge manufacturing equipment. Huawei planned to ship approximately 750,000 units of the 950PR this year, with mass production beginning in April.

Full-scale shipments are anticipated to start in the second half of 2026. DeepSeek’s V4 includes two versions: V4-Pro with 1.6 trillion total parameters and V4-Flash with 284 billion parameters. Both models support a one-million-token context window.

The models are available as open-source releases under the permissive MIT open-source licence. This licence allows companies to freely use, modify, and commercialise the models.

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• DeepSeek’s V4 AI model release has led to a significant increase in demand for Huawei’s Ascend 950 AI chips among major Chinese internet and cloud computing firms.

• Huawei’s 950PR chip, a variant of the Ascend 950 series, outperforms Nvidia’s H20 and is the only domestic chip supporting compressed numerical format for AI calculations.

• U.S. export controls on advanced Nvidia chips and chipmaking tools contribute to the demand for Huawei’s products and are expected to cause supply constraints for the 950.

Source: REUTERS

China Imposes New Controls on Autonomous Taxi Sector After Wuhan Incident

China's emerging autonomous vehicle industry, specifically its robotaxi segment, now operates under a period of increased regulatory scrutiny. Authorities have recently implemented more stringent licensing requirements for these driverless transport services. This move follows a significant operational malfunction in Wuhan, an incident that notably inconvenienced numerous passengers and caused traffic disruption lasting for several hours.

Credit: APOLLO GO

The regulatory adjustments represent a distinct change in the strategic approach to advanced mobility solutions within the country. Previously, the emphasis for robotaxi organisations had been on the rapid deployment and widespread introduction of these services. However, this focus has evidently shifted towards a greater prioritisation of safety protocols and robust operational oversight.

And so, the regulatory bodies are currently conducting a detailed review into the precise causes of the Wuhan system failure. This examination seeks to understand the technical and procedural deficiencies that led to the prolonged interruption of services. The outcome of this review is expected to inform future policy decisions affecting the entire robotaxi ecosystem.

The incident itself, characterised by its capacity to strand passengers and impede traffic flows for an extended duration, highlights potential challenges inherent in the large scale operation of autonomous transport systems. Such occurrences necessitate a thorough analysis to prevent their recurrence. Operational reliability and public safety are now positioned at the forefront of regulatory concerns.

This recalibration of priorities means that companies developing and operating robotaxi services will likely face a more demanding environment for gaining official authorisation. Licensing processes are now demonstrably stricter, reflecting a more cautious stance by national and local authorities. The goal is to ensure a higher standard of operational security before further expansion proceeds.

The tightening of regulatory frameworks also signals a maturation of the industry's oversight mechanisms. As autonomous driving technology advances, the governance surrounding its public application must likewise evolve. This proactive stance aims to balance the drive for technological advancement with essential public safety considerations.

But some within the Big Tech companies developing these systems may find the new environment challenging. The previous era favoured quick market penetration, allowing organisations to scale operations with comparative speed. The current situation demands a more deliberate, safety oriented trajectory for expansion.

According to the SCMP, these licensing curbs directly followed the Wuhan system failure. The incident served as a critical impetus for the authorities to reconsider their initial policy framework. The intention is to cultivate a more secure operational landscape for future autonomous transport programmes.

One such service, Apollo Go, operates robotaxis. A safety operator typically sits in the driver's seat of an Apollo Go robotaxi. This indicates the continued presence of human oversight within some driverless vehicle operations, even as these vehicles travel to locations such as Wuhan Tianhe International Airport. The role of these human operators in managing unforeseen circumstances is a key aspect of current robotaxi deployment models.

The review of the Wuhan incident will likely scrutinise all facets of the system's operation, including hardware, software, and human intervention protocols. Lessons derived from this analysis will be instrumental in shaping the future development and regulatory compliance for all robotaxi developers and providers. The overall aim remains to build public trust in this evolving transport solution.

The current emphasis suggests that regulatory bodies are keen to establish a solid foundation of safety and reliability before allowing for an unrestricted proliferation of robotaxi services. This careful, phased approach is intended to mitigate risks associated with advanced autonomous technologies operating in complex urban environments. The industry's future growth is now explicitly tied to its ability to meet these elevated safety benchmarks.

• Chinese regulators have intensified licensing requirements for robotaxis.

• This regulatory shift was triggered by a recent system malfunction in Wuhan.

• The Wuhan incident left passengers stranded and disrupted traffic for hours.

• Authorities are now prioritising safety oversight over rapid deployment of services.

• An Apollo Go robotaxi, with a safety operator, operates near Wuhan Tianhe International Airport.

Source: SCMP