Meta plunged nearly 15% on Thursday after Facebook’s parent company predicted increased spending as it plans to “aggressively invest” in artificial intelligence.
Mark Zuckerberg’s tech giant’s stock was down 13.5% at $427 as of 11:30 a.m. ET, threatening to wipe out about $200 billion of its market value.
Zuckerberg’s net worth also took a big hit, with about $730 million wiped out, leaving him below arch-rival Elon Musk on the Bloomberg Billionaires Index.
The 39-year-old boss, who received a mere $1 salary from Meta in 2023, is worth an estimated $175 billion, most of it tied to 13% of Meta, leaving him billions of dollars behind Musk. ing.
Investors are losing patience with Mr. Zuckerberg’s huge investment in artificial intelligence after the company announced lower-than-expected earnings late Wednesday while hinting at further spending and a long road to profitability. It seems like there is.
Meta announced on Wednesday that it would increase investment in AI projects by up to $5 billion, and increase full-year capital spending from $30 billion to $37 billion to $35 billion to $40 billion.
“We expect capital spending to continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” the company said after announcing the results.
Zuckerberg told analysts on a conference call that a focus on AI “will give us a lot more investment space before we start seeing much revenue from these new products.”
“On the positive side, we have a strong track record of effectively monetizing our new AI services once they reach scale,” he added.
His comments and quarterly results tempered expectations for Meta’s AI investments after a string of blockbuster quarters for the social media giant.
Meta Inc. enjoyed the largest single-day market capitalization increase in Wall Street history after its last quarterly report, in which it reported strong results and announced its first-ever dividend.
“Investors are skeptical of increased AI spending. Some of these investments can take years to pay off,” said Jasmine Enberg, principal analyst at Insider Intelligence.
“However, Meta is vying for victory in the AI race, and Meta AI could be a dark horse. Audiences are built in through existing apps and ultimately monetized through the advertising ecosystem. “It will be,” Enberg said.
Meta’s AI competitors include Google and Microsoft. Microsoft has a multi-year, $10 billion partnership with OpenAI, which developed ChatGPT.
Just last month, Microsoft revealed that it is planning up to $100 billion in data center projects alongside OpenAI, including an AI supercomputer called Stargate scheduled to launch in 2028.
