Meta shares slump as Zuckerberg says it may take years to profit from new AI ventures

Tech giant plans to invest heavily in building AI infrastructure like data centres

Vishwam Sankaran
Thursday 25 April 2024 06:55 BST
Related: Meta AI across platforms raises privacy and bias concerns

Meta’s stock price sank by over 16 per cent on Wednesday after the tech giant’s chief Mark Zuckerberg said it could take the company years to profit from its generative artificial intelligence projects.

Shares of Meta, the parent company of Facebook, Instagram and Whatsapp, dropped to about $412 after the Silicon Valley titan announced that it anticipated lower revenue for the current quarter than what Wall Street predicted.

Although Meta grew its revenue by 27 per cent in the quarter ending March 2024 compared to the same period last year and more than doubled its profit, investors seem to have cared more about the company’s lukewarm expectations for the quarter ending 30 June.

The company also announced plans to increase capital expenditure for 2024 to between $35bn and $40bn, up from a previous estimate of $30bn to $37bn.

Most of the new heavy investments are expected to go into building AI infrastructure, including chip designs and data centres.

Meta to bring its operating system to other VR headsets

Since OpenAI released its AI chatbot ChatGPT in 2022, Mr Zuckerberg has attempted to plug AI tools into his products, including into the search tools of Instagram and Facebook and in smart augmented reality glasses and image-generation softwares.

Last week, the tech giant released a new AI model Llama 3, which it claims is the state of the art.

The company also said it would make the new model open source, putting it in competition with Google and OpenAI which have refused to make their similar AI work open to the public.

“The new version of Meta AI with Llama 3 is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.”

As a result of further investments into AI, Meta anticipates its revenue for the second quarter to be lower than Wall Street’s expectations.

Mr Zuckerberg warned investors that the upcoming AI investments could take a long time to generate returns for the company – perhaps years – but urged them to remain patient to reap its long-term benefits.

“We’ve gotten more optimistic and ambitious on AI,” the Meta boss said.

“We’re at a place where we’ve shown that we can build leading models and be the leading AI company in the world. And that opens up a lot of additional opportunities beyond just ones that are the most obvious ones for us.”

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