AI Infrastructure Wars Heat Up While Holiday Forecasts Show $305B Spending Surge

Your Weekly DTC Industry Roundup

Another week, another round of tech billionaires fighting over AI money while DTC founders wonder if they're building real businesses or just feeding algorithm machines …

Meta just reported massive ad revenue growth but spooked investors with AI infrastructure costs that would make NASA jealous. Meanwhile, holiday shopping forecasts show consumers are ready to spend, but only if you're willing to play the discount game harder than ever.

And while everyone's focused on the giants, there's a beaten-down marketplace stock that's quietly printing cash and buying back shares like it's going out of style.

Here's everything that happened:

• Meta ad revenue jumps 26% to $50.1B, but investors panic over ballooning AI infrastructure costs
• Holiday forecasts predict $305B in online sales, with mobile accounting for 56% and bigger discounts across the board
• Etsy's transformation from growth-obsessed marketplace to cash-generating buyback machine could signal 50% upside
• Plus: The exact Meta account structure that wins Black Friday (tested playbook from seven-figure spenders)

Let's dig in …

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AI Infrastructure

Meta's $50B Ad Business Can't Calm AI Spending Fears

Investors dumped shares despite record ad performance because of what's coming next.

Meta just posted its strongest ad revenue quarter in years …$50.1 billion, up 26% year-over-year.

Instagram hit 3 billion monthly users. Ad impressions grew 14% while prices climbed 10%.

By every traditional metric, this was a blowout quarter.

But investors sent the stock down 10% in after-hours trading anyway.

The reason? Meta's AI infrastructure spending is accelerating faster than anyone expected. CFO Susan Li warned that total expenses in 2026 will grow at a "significantly faster percentage rate" than 2025, driven primarily by data centers and cloud costs.

Zuckerberg defended the spending by saying Meta remains "underbuilt" for its AI ambitions. He pointed to external companies asking for API access and compute services they can't provide yet.

Translation: Meta's betting everything on AI dominating the future of advertising and social media. The current ad business, no matter how profitable, is just funding for the real game.

For DTC brands, this matters more than you think. Meta's AI recommendation systems are already boosting time spent on Facebook by 5% and Threads by 10%. Their automated ad solutions now run at a $60 billion annual rate.

The platform that drives your customer acquisition is transforming into something completely different. Whether that helps or hurts your CACs remains to be seen.

Read more details

Holiday Forecasting

$305B Holiday Spending Forecast Comes With Discount Warnings

Consumers are ready to spend, but they're expecting bigger deals than ever.

Here's what the major holiday forecasts are telling us about the next two months …

Online sales are projected to hit $305-310 billion from November through January, up to 9% growth year-over-year. That outpaces overall retail growth, which is expected to slow to just 2.9-3.4%.

Mobile will dominate even more than before, accounting for 56.1% of online sales during peak weeks. That's $142.7 billion in mobile commerce, up 8.5% from last year.

But here's the catch: Average discount rates across the Cyber 5 period are expected to hit 29%, higher than 2024 levels. Brands are starting promotions earlier in October to prime shoppers, but consumers are getting trained to wait for bigger deals.

Buy-now-pay-later usage is also surging, with $20.2 billion projected for November and December alone. That's $2 billion more than last year, suggesting households are feeling economic pressure despite strong spending intentions.

The resale market is capturing more wallet share too. ThredUp reports consumers plan to allocate 40% of holiday budgets to secondhand gifts, up from the typical 30%.

Bottom line: Demand is there, but margin pressure is real. Consumers expect both deals and flexible payment options.

See full holiday data

Marketplace Evolution

Etsy's Cash Machine Strategy Could Drive 50% Stock Gains

From growth-obsessed marketplace to shareholder-friendly cash printer.

While everyone's focused on Amazon and Meta, Etsy just quietly demonstrated what a mature marketplace business model actually looks like.

The company generated over $700 million in annual free cash flow and bought back $525 million worth of shares in just the first six months of 2025. They ended the period with $1.5 billion in cash.

That's not typical marketplace behavior. Most platforms reinvest every dollar into growth, logistics, and technology. Etsy decided to become a cash distribution machine instead.

The strategy makes sense when you understand their position. They run an asset-light operation with no warehouses, minimal logistics costs, only 2,400 employees, and virtually no inventory exposure during tariff uncertainty.

Their 72% gross profit margin ranks in the 93rd percentile of consumer discretionary companies. The 13.5% buyback yield over the past decade puts them in the 94th percentile.

This isn't about explosive growth anymore, it's about extracting maximum value from a defensible niche. Handmade and personalized products can't be replicated by Amazon's scale advantages.

With 10-12% annual share shrinkage, margin-driven earnings growth, and potential multiple expansion, analysts see room for 50% upside from current levels.

Track this transformation

Podcast

How to Set Up Your Meta Account for Black Friday Success

How should your Meta Ads account be structured to win this Black Friday and Cyber Monday?

In this episode of The DTC Hotline, the CTC crew Richard, Tony, and Luke break down exactly how to set up your Meta account for BFCM success.

You’ll learn:

• The simplest campaign structure that maximizes performance during peak sales
• When (and why) to use separate campaigns or bid caps
• How to create a “phantom” highest-volume campaign ready to flip on when spend surges
• The right budget pacing and time-zone settings for the BFCM weekend
• Quick landing page, creative, and offer consistency tips that keep your Meta ecosystem tight

Whether you’re managing seven figure ad spend or just trying to get your setup right before Black Friday hits, this episode gives you a clear, tested roadmap straight from CTC’s media team.

Watch now

Final Thoughts

What This Means for Founders

The common thread running through all these stories is the maturation of digital commerce infrastructure.

Meta's massive AI spending isn't just about better ad targeting, it's about building the foundational technology that will power commerce for the next decade.

Whether that benefits or hurts individual brands depends on how well you adapt to algorithmic commerce.

The holiday forecasts show consumers are willing to spend, but they're also more sophisticated about when and how they spend. Earlier promotions, bigger discounts, and flexible payment options aren't nice-to-haves anymore. They're table stakes for competing during peak season.

Etsy's transformation from growth story to cash machine shows what happens when marketplaces mature. Instead of chasing every dollar of gross merchandise value, they're optimizing for sustainable profitability and shareholder returns.

For DTC brands, this suggests the wild west phase of ecommerce is ending. The platforms are consolidating around profitable, sustainable models. The brands that succeed will be those that build similarly sustainable unit economics rather than depending on platform growth to paper over weak fundamentals.

As we head into Black Friday, the brands with tight account structures, clear profit margins, and realistic growth expectations will outperform those still chasing vanity metrics.

The infrastructure is maturing.

Make sure your business is too.