Meta experienced a significant decrease in stock value, dropping 15% to $421.40 after the company announced a sharp increase in its investment plans for artificial intelligence (AI) technologies. This decrease removed approximately $183 billion from its market capitalization.
Despite reporting strong first-quarter earnings, with profits more than doubling and a 27% increase in revenue year-over-year, the announcement of up to $5 billion additional spending on AI development for the year concerned investors. This reaction suggests a growing apprehension about the financial burden of such substantial investments.
Meta is actively competing with tech giants like Microsoft and Google in the AI sector, aiming to lead in innovation and application. However, the extended timeline and high costs associated with developing cutting-edge AI tools have sparked unease among shareholders. In response to this investment strategy, Meta also adjusted its full-year capital expenditure forecast, raising it from the previously estimated $30-37 billion to between $35-40 billion. This adjustment reflects the company’s intent to fast-track its infrastructure developments to better support its AI initiatives.
CEO Mark Zuckerberg, on an investor call, emphasized Meta’s commitment to becoming a global leader in AI. He indicated that substantial investments would precede significant revenue generation from new products but expressed confidence in the company’s ability to monetize these innovations effectively once they are scaled.
