Meta shares fall as frustration grows over AI spending plans
Meta shares dropped significantly after the company announced increased spending on artificial intelligence projects while profits declined. Investors are concerned that the company is prioritizing long-term AI infrastructure over immediate financial returns.
Why it matters
The market's reaction highlights growing investor skepticism regarding the massive capital expenditure required for AI development versus actual profitability.
Image source, Reuters Image caption, Meta CEO Mark Zuckerberg has turned the company into a major spender on AI
Meta shares plunged on Wednesday as investors balked at its promise to keep spending on artificial intelligence (AI) projects while profits dwindle.
Shares in the firm behind Instagram and Facebook fell as much as 11% in extended trading after its results for the quarter from April to June showed revenue grew 28% from a year ago to $61bn (£45.6bn), while profits fell 14% to $6bn.
Meta said it would spend $130bn to $145bn this year, mostly on AI, up from the $125bn it said it planned to spend just three months ago.
Chief executive Mark Zuckerberg said the firm's AI spending was "accelerating every part of our core business" and it plans to start selling the technology to other companies.
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