Silicon Valley is rapidly ramping up investments in AI, with AI agents emerging as the next major focus. Meta CEO Mark Zuckerberg believes that in the near future, billions of people will have personal AI agents working continuously on their behalf, and he is willing to spend aggressively to ensure Meta stays ahead in the race.
Unlike traditional chatbots, AI agents are designed to automate tasks, make decisions and complete work independently, even when users are offline.
"I think that it's extremely unlikely if you look out five years from now, for example – whatever period of time you want – that you don't have billions of people with a personal agent that understands your goals and that is just working on your behalf 24/7 to achieve your goals in whatever the domain is that you care about," Zuckerberg said during Meta's latest earnings call.
He added that personal AI agents would become "the foundation for our next wave of products and revenue lines in the months and years ahead."
META JOINS GOOGLE IN SPENDING HEAVILY ON AI
Building AI agents requires enormous investment, similar to the development of large language models (LLMs). Meta's latest financial results reflect the cost of this strategy, with the company reporting a sharp decline in free cash flow as it continues to invest heavily in AI infrastructure.
According to Meta's latest earnings report, free cash flow in the second quarter dropped 91 per cent to $784 million, down from $8.55 billion a year earlier, marking its lowest level since 2022. Free cash flow represents the money a company retains after covering operating expenses and long-term investments such as infrastructure and buildings.
The figures indicate that Meta spent nearly $8 billion more than the previous year as part of its AI expansion. The company also increased the lower end of its 2026 capital expenditure forecast from $125 billion to $130 billion. Following the announcement, Meta's shares fell about 10 per cent.
Meta is not alone in making massive AI investments. Google recently reported negative free cash flow for the first time in 22 years. Alphabet, Google's parent company, posted negative free cash flow of $5.9 billion during the second quarter as it continued spending heavily on AI development.
Industry observers expect companies such as Meta and Google to continue deploying large amounts of capital in an effort to strengthen their positions in the AI race.
Zuckerberg said that while Meta intends to rent computing power to customers running AI models, "there was a significantly higher margin on selling intelligence rather than selling compute directly."
According to reports, Meta plans to double its computing capacity to 7 gigawatts this year and then to 14 gigawatts next year. The company currently has 32 data centres either operational or under construction.
WHATSAPP TO PLAY A BIGGER ROLE
This year, Meta introduced its new Muse family of AI models, including Muse Spark 1.1 and Muse Image. These models were developed in less than a year by Meta Superintelligence Labs (MSL), led by Alexandr Wang.
Zuckerberg said messaging platforms would become increasingly important in the AI agent era, serving as the primary interface through which users interact with their AI assistants.
"As we move toward a future where we're all interacting with multiple agents, I think that WhatsApp and our other messaging surfaces are going to become increasingly important," he said.
According to Zuckerberg, WhatsApp is currently the largest platform for Meta AI, although Instagram is expected to receive additional AI features in the near future.
Beyond AI infrastructure, Meta continues to incur significant costs through its Reality Labs division, which develops augmented and virtual reality products. The unit recorded a loss of around $4.6 billion during the quarter and has accumulated more than $80 billion in operating losses since 2021.
The company has also recorded severance costs following the layoff of around 10 per cent of its workforce, or approximately 8,000 employees, in May this year.
