How Meta is looking for revenue outside advertising to justify its ballooning capex bill

For a long time, Meta minted money from its advertising business, which accounted for nearly all of its revenue, and shareholders rejoiced. Now, Meta is still minting money from its advertising business, which accounts for nearly all of its revenue, but despite posting two earnings beats this year, the stock is down about 4% year to date.

What’s different now is that the once asset-light software business has been funneling money toward capital expenditure — now expected to reach an eye-watering $125 billion to $145 billion this year — as it builds out its AI business. And unlike its Big Tech peers doing the same, it doesn’t have their lucrative cloud and enterprise revenue sources to soften the blow.

A series of developments Wednesday suggests that Meta is genuinely trying to change that.

First, the social media company announced a series of subscription tiers for its flagship apps, so Instagram, WhatsApp, and Facebook users can now pay a monthly fee for added features. The company is also monetizing its AI chatbot for the first time by charging monthly fees to those who use its expensive tokens in a meaningful way.

But wringing a few dollars a month out of consumer power users won’t be enough to offset a $145 billion bill. To truly move the needle, Meta is making a direct play for the lucrative corporate market it has historically struggled to capture. According to an internal memo reported by The Information, Meta is launching a new “Enterprise Solutions” unit designed to embed its own software engineers and product managers directly within large corporate clients.

By mimicking the “forward-deployed engineer” models used by Google and OpenAI, Meta hopes to hand-hold businesses through integrating its AI tools — and finally open up the B2B revenue streams it desperately needs. With its recent blocked attempt to buy enterprise AI company Manus, an internal, ground-up approach is becoming especially critical.

Finally, Meta is again looking at what its peers have — cloud businesses, this time — and saying it could soon have that, too. At Meta’s shareholder meeting Wednesday, CEO Mark Zuckerberg said its own cloud computing business is “definitely on the table.”

“Almost every week there are different companies that come to us from outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we’ve bought it at,” Zuckerberg said. “We haven’t done that yet because we think that we have a use for the compute. But obviously if we get to a point where we feel that we have overbuilt, then that is an option that we have.” In other words, if internal use of all that AI infrastructure doesn’t pan out, Meta could push those costs down the line like everyone else.