Justin Sullivan/Getty Images
Photo of Meta headquarters in Menlo Park, California on February 2, 2023.
London
CNN
—
Meta stock plummets The Facebook owner surprised investors in pre-market trading Thursday as he planned to “aggressively invest” in artificial intelligence.
Shares plunged about 13%, threatening to wipe out nearly $163 billion in market value as investors focused beyond strong first-quarter profits on the company's hefty costs in building its AI future. was there.
The company is in direct competition with Microsoft and Google to unlock the huge potential of AI. The rewards could be huge, but Meta's recent earnings underscore that building the best tools is expensive and time-consuming.
I also own META WhatsApp and Instagram said Wednesday that first-quarter profits more than doubled compared to the same period last year, with revenue up 27%. However, shareholders were spooked as his projected AI investments increased by his $5 billion and could increase further in the coming years.
“The language around spending plans is once again getting bolder and this may be spooking markets,” Sophie Rand Yates, chief equity analyst at Hargreaves Lansdown, said in a note on Thursday. Stated.
“For all of Meta's bold AI plans, we can't take our eyes off our core advertising efforts, which are at the heart of our business. Meta's resources are vast but not limitless, and its digital advertising market share is at all costs. We need to protect it,” she added.
Meta said full-year capital spending will be in the range of $35 billion to $40 billion as it continues to accelerate infrastructure spending to support AI, up from previous guidance of $30 billion to $37 billion. exceeded.
“We expect our capital spending to continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” the company added in a statement.
CEO Mark Zuckerberg focused most of his comments on AI on a conference call with investors. He said Meta wants to become “the world's leading AI company” and “will need to invest significantly over the next few years to build even more advanced models.”
“We will meaningfully increase spending before we see much revenue from some of these new products…On the positive side, once new AI services reach scale, we will have a strong ability to monetize them effectively,” Meta said. “We have a proven track record,” he added.
A weaker-than-expected outlook for the current quarter could also weigh on the stock. Meta expects sales to be between $36.5 billion and $39 billion, compared to analysts' expectations of $38.2 billion.
“The slightly lower-than-expected earnings forecast has led to investors' concerns about the company's future performance,” said Stephen Innes, managing partner at SPI Asset Management.