Meta has been remarkably swift in expanding its extensive data center and computing infrastructure for artificial intelligence projects, leaving CEO Mark Zuckerberg somewhat surprised. During a call with analysts on Wednesday following the third-quarter earnings report, Zuckerberg detailed how Meta's increased costs for the year are linked to the rapid pace at which staff can set up data centers, servers, and chips for AI initiatives. "At the start of the year, we had a range of what we thought was achievable, and we've managed to exceed our initial hopes and expectations, " said Zuckerberg. This also indicates that investors should prepare for elevated expenses. Meta has raised the lower end of its capital expenditure forecast for 2024 from $37 billion to $38 billion, while the upper limit remains at $40 billion. "I'm actually quite pleased that the team is executing effectively, " Zuckerberg noted. "This execution gives me greater optimism that we can continue this development at a strong pace. " Meta mentioned that expenditures, which encompass billions of dollars spent on Nvidia's graphics processing units, are expected to rise notably by 2025. Despite beating expectations for earnings and revenue, Meta's shares fell in after-hours trading on Wednesday, influenced by weaker-than-anticipated user growth and increasing costs. During the earnings call, Barclays analyst Ross Sandler inquired about how quickly Meta could establish the substantial computing infrastructure necessary for its generative AI goals, considering potential challenges like energy needs and the development timeline for custom AI-specific chips. Zuckerberg praised Meta's infrastructure team, stating they are "executing quite well" in enhancing computing capacity for various AI projects, including the Llama series of large language models. Concerns have arisen on Wall Street that tech giants like Meta and Alphabet may be overspending on infrastructure without yielding immediate returns. Zuckerberg acknowledged this sentiment in a July interview with Bloomberg, saying there’s a possibility that companies are "overbuilding now. " However, he emphasized the significant risks posed by underinvestment. "The model for building out infrastructure might not align with what investors want to hear in the short term, as we're scaling up, " Zuckerberg explained on Wednesday.

"Yet, I believe the opportunities here are significant, and we intend to continue investing heavily. I'm proud of the teams that are effectively establishing considerable capacity to enable us to deliver top-notch models and products. " Investors are facing substantial expenses in other areas as well. Meta's Reality Labs division, which focuses on metaverse technologies, reported an operating loss of $4. 4 billion in the third quarter. The company anticipates that "operating losses in 2024 will increase significantly year-over-year due to ongoing product development efforts and investments aimed at scaling our ecosystem further. " WATCH: Meta stock declines post-earnings, which some view as an "overreaction. "