Meta forecasts higher AI spending and weaker revenue | The Mighty ...
Meta Platforms, the parent company of Facebook and Instagram, recently announced forecasts of higher expenses and weaker-than-expected revenue, leading to a significant drop in its stock value. The company is ramping up its investments in artificial intelligence (AI) technologies, which has caused concern among investors.
Financial Impact
Following the announcement, Meta's shares plummeted by about 13% in after-hours trading, resulting in a loss of $160 billion in market capitalization. Additionally, shares of other tech giants such as Alphabet and Snap also experienced declines.
Meta projected its revenue for the April-June quarter to be between $36.5 billion and $39 billion, falling short of analysts' expectations. The company attributed the lower revenue forecast to increased expenses related to AI initiatives and the necessary computing infrastructure.
AI Investments
To support its AI products and infrastructure, Meta raised its forecast for capital expenditure for 2024 to a range of $30 billion-$40 billion. The company also adjusted its total expense forecast to $96 billion-$99 billion for the year, signaling a significant commitment to AI development.
AI Investments
To support its AI products and infrastructure, Meta raised its forecast for capital expenditure for 2024 to a range of $30 billion-$40 billion. The company also adjusted its total expense forecast to $96 billion-$99 billion for the year, signaling a significant commitment to AI development.
Despite the optimistic outlook for AI, Meta's recent financial results seem to have tempered expectations, especially following its remarkable performance in previous quarters. The company has been focusing on enhancing its advertising products with AI capabilities and introducing new features like AI-powered chat assistants.
User Growth and Engagement
In terms of user metrics, Meta reported a 7% increase in daily active people (DAP) across its platforms, including Facebook, Instagram, Messenger, and WhatsApp. This growth in DAP reflects the company's ongoing efforts to drive engagement through AI-driven features.
Meta's decision to prioritize AI development comes amidst regulatory challenges faced by competitors like TikTok, potentially opening up new opportunities for the company in the social media landscape.
While Meta continues to invest heavily in AI, experts caution that the company must not neglect its core advertising business. Balancing AI innovation with revenue generation remains a critical challenge for Meta as it navigates the evolving digital landscape.
Overall, Meta's strategic focus on AI signals a long-term commitment to innovation and technological advancement, albeit with short-term financial implications.
