Meta Platforms (META) revealed billions spent on artificial intelligence, and its stock value dramatically declined. CEO Mark Zuckerberg’s thrust into the upcoming field of artificial intelligence after Facebook’s earlier investments into the metaverse disappointed the market, and Meta’s share price fell by almost 16 percent.
Although Mark Zuckerberg tried to reassure Wall Street, the market share of Meta plunged as shares fell by 16 percent. CEO Zuckerberg said that enormous investments were necessary to scale the product and called it a “clear monetizable opportunity” but failed to convince the market.
Meta stock has risen 39 percent this year after the company took several cost-cutting measures to increase profits. The parent of Facebook, WhatsApp, Instagram, and Threads had been at a high share price these past few months, but the new proposed capital expenditure on AI led to the most significant drop in the company’s share price since October 2022.
Meta said that AI helped in the growth of its web fan base as well as in advertising. It said that its algorithms improved the company’s growth. Meta performed well among its peers in big tech till Thursday.
Meta posted solid results in the first quarter. Its revenue was $36.5 billion, 27 percent higher than the same quarter last year. It also more than doubled its profit, which was $12.4 billion.
Last quarter, Meta made a few changes to please its shareholders. It announced a dividend and a $50 billion stock buyback. The market rewarded the Menlo Park, California company, making it one of the best-performing tech stocks.
Meta is back this quarter with future-looking goals, but the market does not respond positively to these vast investments. Meta is planning to increase costs and says that estimates for expenditures on servers, hardware, and data centers would be $35 billion to $40 billion.
Meta is competing with other big tech companies, such as Alphabet’s Google and Microsoft, which have already invested billions in AI.
CWEB analyzes that Facebook needs to invest in artificial intelligence to keep up with its rivals in big tech. All these companies are betting on artificial intelligence and must invest billions, so Facebook has to do the same.
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