Mark Zuckerberg once ran the coolest thing on the internet. Facebook launched in a Harvard dorm room in 2004. It spread first to elite colleges, then everywhere. The 2012 IPO made it a phenomenon. Yet two decades later the picture looks different. Feeds overflow with AI-generated junk, sleazy ads and misinformation. Users appear to be slipping away.
Julia Angwin laid out the case in blunt terms this week. In a New York Times opinion piece, the investigative journalist declared that Meta has entered its zombie era. “Meta’s earnings are starting to show the strain from years of growing consumer disaffection and reckless spending,” she wrote. “The latest earnings, released on April 29, revealed a dip in user numbers for the first time since it started reporting these figures. And the slumping stock confirms what we have all known in our guts for a while: This is a company entering its zombie era.”
Death on the internet rarely means total disappearance. AOL and Yahoo linger on. They still generate revenue by squeezing remaining traffic and cutting costs. But teens avoid them. They carry the stink of obsolescence. Angwin argues Facebook now heads down the same path. “Many teens wouldn’t be caught dead with an AOL account, a Yahoo email address — or a Facebook profile.”
The numbers tell part of the story. Meta’s first-quarter 2026 revenue hit $56.3 billion, up 33 percent from a year earlier. That marked the biggest year-over-year quarterly jump in nearly five years, according to a Wall Street Journal report. Advertising still pours in. Yet the company simultaneously raised its full-year capital expenditure forecast to between $125 billion and $145 billion. The previous range sat at $115 billion to $135 billion. Last year it spent $72.2 billion.
Most of that money fuels artificial intelligence infrastructure. Data centers. Chips. Massive compute clusters. Zuckerberg has pivoted hard. The metaverse push, which prompted the 2021 name change to Meta, largely failed. Reality Labs, the division housing those efforts, lost $4 billion in the first quarter of 2026 alone. The bleeding continues.
So Meta doubled down on AI. It released Llama models as open source. It poured resources into a new closed-source effort once codenamed Avocado and later unveiled as Muse Spark. The shift away from fully open models signals a move toward proprietary systems that might generate direct revenue. Yet early results on the consumer side look mixed at best. Facebook and Instagram feeds now swarm with AI slop. Users complain. Engagement bait proliferates.
And the spending keeps climbing. A Fortune article from late April captured the market reaction. Investors flinched when the higher capex number dropped. Zuckerberg tried to reassure them. He spoke of confidence in the investments. Returns, however, remain hazy. Analysts question when — or if — the enormous outlays will translate into sustainable profit growth beyond the core ad business.
Cost cutting runs in parallel. Meta plans to lay off about 10 percent of its workforce, roughly 8,000 employees, on May 20. The BBC reported the move as a way to improve efficiency while pouring money into AI. The company also left thousands of open positions unfilled. One memo viewed by insiders noted that this year’s AI-related capital spending roughly equals the total from the previous three years combined.
Zuckerberg himself addressed the human side on the earnings call. As detailed in a New York Times story on record AI spending, he said, “People will be more important in the future, not less.” The statement came amid broader industry worries that AI could displace jobs even as companies hire specialized talent to build it.
But here’s the tension. Ad revenue still grows. Prices rose 12 percent in the quarter. The business throws off enough cash to absorb these losses for now. A Motley Fool analysis noted that while Meta sees benefits from AI today, it bears the bulk of upfront costs. Revenue grew 22 percent in 2025. Capital expenditures, however, surged 84 percent to $72 billion that year and now aim much higher.
Critics see a potential death spiral. Heavy investment in AI that fails to deliver competitive models. Feeds degraded by low-quality generated content. A younger generation that views Facebook as their parents’ network. Angwin’s piece paints a future where the company shrinks to a shell that monetizes its remaining users with ever more intrusive ads while the exciting work happens elsewhere.
Others remain more optimistic. Some analysts point out that Meta’s ad machine has proven resilient. Its open-source Llama efforts built goodwill in the developer community even if they did not produce immediate commercial wins. The new Muse Spark model shows early promise, according to a CNBC report published just before the earnings release. Yet Wall Street wants clearer signs that Zuckerberg’s AI strategy will pay off before it rewards the stock with higher valuations.
The first-quarter results offered mixed signals. Revenue beat expectations. Profit grew. But the raised capex forecast overshadowed the good news. Shares fell after the announcement. Recent trading reflects ongoing nervousness. One Yahoo Finance summary captured the mood: investors digesting the reality that ambitious AI plans come with a hefty price tag that could pressure profitability in the near term.
Meta is not alone. The entire industry spends at unprecedented scale. Amazon, Microsoft, Google and others pour hundreds of billions into data centers and chips. A New York Times article on AI spending records put Meta’s quarterly outlay at $19.8 billion, more than half of what the company spent on all of 2024. The article noted that Meta now spends amounts similar to those of Amazon and Microsoft as it transforms from a social media company into an AI company.
Yet the stakes may be highest for Meta. Its core product faces the clearest signs of aging. User disaffection has built for years. Scandals over misinformation, privacy and mental health impacts on teens eroded trust. The company acquired Instagram and WhatsApp to maintain relevance. Those properties still perform. But the original Facebook platform, once the heart of the empire, feels increasingly tired.
Zuckerberg shows no signs of slowing the AI push. He talks about building personal superintelligence. The company hired top talent, including from Scale AI in a $14.3 billion deal that brought key engineers in-house. It works on custom chips. It expands infrastructure at a pace few can match.
Still the questions mount. Can the ad business continue to subsidize these losses indefinitely? Will AI improvements actually make the products better rather than flooding them with mediocre generated content? And what happens if the user base keeps eroding, even slowly?
Angwin believes the trajectory points toward decline. “I believe the company — one of the most powerful media organizations in the world and one of the most valuable members of the S&P 500 — is at the start of a long, slow decline that will trigger aftershocks to our economy and our society,” she wrote. The piece landed the same day as this Futurism article that declared Meta has entered its death spiral. Both capture a growing sense that the glory days are gone.
History offers cautionary tales. Yahoo bought Tumblr and other assets in a desperate bid to stay relevant. AOL merged with Time Warner in a disastrous deal. Both companies survived in some form. Neither recaptured its cultural dominance. Meta could follow a similar script. It might remain profitable. It might cut costs further. It might milk its massive installed base for decades.
But the excitement has faded. The feeds feel stale. The AI investments, while ambitious, have so far mostly produced more clutter for users to scroll past. Zuckerberg tasted real cultural power once. He wants it back through AI. Whether the math works — whether the returns ever justify the hundreds of billions going out the door — will determine if Meta avoids the zombie fate or simply becomes another once-great internet name that refuses to die.
The coming quarters will bring more data. More spending reports. More layoffs perhaps. And more AI-generated images and text in places where many users would prefer authentic human connection. The company insists the bet will pay off. Markets remain skeptical. Users vote with their attention. So far, that vote looks increasingly uncertain.
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