Meta stock (META) experienced a sharp drop of more than 10% on Thursday following CEO Mark Zuckerberg’s announcement of increased investment in artificial intelligence (AI) efforts. During the company’s earnings call, Zuckerberg sought to reassure investors about the spending, emphasizing that it will take several years before the AI investments turn a profit.
Meta’s AI investment plan includes the purchase of 350,000 Nvidia H100 AI chips by the end of the year, with estimated costs in the billions of dollars. CFO Susan Li raised the full-year total expenses estimate due to higher infrastructure and legal costs.
Although Wall Street’s reaction to Zuckerberg’s comments was mixed, with some experts believing the investments will pay off in the long run, analysts are optimistic that Meta’s AI investments will enhance its competitiveness against rivals. The focus of these investments is on improving user experience for consumers and advertisers.
Despite beating analysts’ expectations for the quarter, Meta anticipates second quarter revenue slightly below expectations. The company reported revenue of $36.46 billion with earnings per share of $4.71. The second quarter revenue is expected to fall between $36.5 billion and $39 billion.
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