Business

Meta AI spending plans cause share price slump

Image source, Getty Images

Shares of Meta – the owner of Facebook, WhatsApp and Instagram – fell sharply after it announced higher-than-expected spending on artificial intelligence (AI).

They fell more than 15% after hours in New York, despite the tech giant revealing strong results.

Boss Mark Zuckerberg said it would take some time before his huge investment in AI increased revenue.

Meta also said that its X rival, Threads, now has more than 150 million monthly active users, increasing pressure on the Elon Musk-owned platform.

“Threads is poised to beat X by becoming the alternative to Twitter that users and advertisers expect,” said Mike Proulx of analyst Forrester.

AI Features

Meta has updated its ad buying products with AI tools to drive profit growth.

It has also introduced more AI features to its social media platforms, such as chat assistants.

The company said it now expects to spend between $35 billion and $40 billion (£28 billion to £32 billion) in 2024, compared to an earlier forecast of $30 billion to $37 billion.

For investors, this offset positive earnings news.

First-quarter revenue rose 27% to $36.46 billion, while analysts had expected a profit of $36.16 billion.

Analysts, however, said there was logic to Meta’s approach.

Sophie Lund-Yates, of Hargreaves Lansdown, said Meta’s “substantial investment” in AI had helped it get people to spend time on its platforms, so advertisers were willing to spend more of money “at a time when uncertainty in digital advertising remains widespread”.

More than 50 countries are scheduled to hold elections this year, she said, “which significantly increases uncertainty” and may scare off advertisers.

Ms Lund-Yates said that “in the longer term, the biggest risk (for Meta) remains regulatory”.

And in February this year, Meta chief executive Mark Zuckerberg faced heavy criticism from US lawmakers and was pressured to apologize to the families of victims of child sexual exploitation.

Ms. Lund-Yates added that the company has “more than enough resources to launch legal action, but that does not rule out the risks of ups and downs in market sentiment.”

News Source : www.bbc.com
Gn bussni

Sara Adm

Aimant les mots, Sara Smith a commencé à écrire dès son plus jeune âge. En tant qu'éditeur en chef de son journal scolaire, il met en valeur ses compétences en racontant des récits impactants. Smith a ensuite étudié le journalisme à l'université Columbia, où il est diplômé en tête de sa classe.Après avoir étudié au New York Times, Sara décroche un poste de journaliste de nouvelles. Depuis dix ans, il a couvert des événements majeurs tels que les élections présidentielles et les catastrophes naturelles. Il a été acclamé pour sa capacité à créer des récits captivants qui capturent l'expérience humaine.
Back to top button