Meta Stock Rises Despite Layoffs As Ai Expansion And Cloud Computing Plans Raise Concerns About Long Term Margins

. Meta CEO Mark Zuckerberg says AI does not automatically mean people will lose their jobs. Speaking on Complex's Idea Generation, Zuckerberg said AI should help employees become more productive instead of replacing them, adding that higher productivity could create more jobs in the future.

His comments come just days after Meta carried out one of its biggest workforce reductions. The company recently eliminated around 8,000 jobs, or about 10% of its workforce, as part of a major restructuring, according to Firstpost. The layoffs affected several departments, including Integrity, cybersecurity and content design teams.

US employees who lost their jobs received severance benefits, while Meta is moving around 7,000 employees into AI-related roles. It is also removing around 6,000 vacant positions as part of its restructuring.

During Meta's recent earnings call, Zuckerberg said AI can complete many tasks that previously required larger teams. Because of this, the company believes some departments no longer need to be as big. Meta plans to spend between $125 billion and $145 billion on capital expenditure this year. This is almost double last year's spending. Most of this money will go towards building AI data centres, buying specialised AI chips and training advanced AI models inside Meta Superintelligence Labs.

CNBC reported that Meta will sell unused computing capacity to businesses. Bloomberg also reported the company is deciding whether to sell access to its AI models or simply rent out raw computing power. Wall Street welcomed the news.

Meta's stock jumped 9% in one day, its biggest rally in more than five months, as investors liked the idea of new revenue beyond advertising. Investors have been asking Meta to find ways to earn money from the hundreds of billions of dollars it is spending on AI infrastructure and data centres.

In April, Meta increased the upper end of its 2026 capital spending plan by another $10 billion, taking the total to $145 billion. To help pay for these massive investments, Meta also raised $25 billion through a bond sale. Around 98% of the company's revenue still comes from digital ads. So far, most of Meta's AI investments have mainly improved its advertising business.

But Wall Street also sees a downside to Meta entering the cloud business. Selling cloud services usually requires large enterprise sales teams and customer support operations, which are expensive. That means Meta's profit margins could fall.

Cloud businesses usually earn much lower margins than Meta's advertising business. Meta currently has one of the highest profit margins in the technology industry. Its latest gross margin was 82%, while its operating margin was 41%, as stated by CNBC.

Google's business shows why investors are cautious. Google's advertising business earns an operating margin of about 42%, while its cloud business earns only around 18%.

Paul Meeks said Meta already has one of the strongest business models in technology because of advertising. He warned that moving into cloud computing could lower the company's overall profit margins. Meeks believes Meta would earn better returns by using AI to improve its own products and services instead of entering the highly competitive cloud infrastructure business.

Overall, Meta is trying to balance three big goals at once: cutting costs through layoffs, spending billions to become an AI leader, and finding new ways to make money beyond advertising. According to reports, investors are excited about the new revenue opportunities but are also preparing for lower profit margins if Meta becomes a major cloud computing provider.

Durva More is a Senior Content Producer at Hindustan Times, where she covers finance, and global news. She brings experience across digital and television journalism, with a strong focus on breaking news, business reporting, and international affairs. Before joining Hindustan Times, Durva worked as an International News Writer at The Economic Times, covering a diverse range of subjects including global politics, business, sports, entertainment, and major world events. She also worked as a Business Reporter with NDTV Profit. A postgraduate diploma holder in Journalism from the Asian College of Journalism, Durva is passionate about field reporting and storytelling. She thrives on the adrenaline of chasing stories, speaking with people from different walks of life, and amplifying voices that deserve to be heard. Her reporting is driven by curiosity, accuracy, and a commitment to making complex subjects accessible to readers. When she is not chasing stories or covering breaking news, Durva enjoys reading books and painting. She loves exploring new ideas, meeting people, and learning about different perspectives. For her, both journalism and art are ways to understand the world and tell stories that matter.Read More