Meta shares fell 15% in premarket trading, which will reduce the company's market value by about $185 billion. This comes after the tech giant released a financial report that revealed higher-than-expected AI spending. Bloomberg writes about it.
The company attributes some of its recent user growth and advertising success to artificial intelligence, pointing to improvements in its recommendation algorithms. Meta is now putting more resources into artificial intelligence, which requires a significant investment in computing power. The company's founder, Mark Zuckerberg, told investors that the investment will grow «significantly» but that it will take a long time, perhaps years, to turn a profit.. However, he urged them to see the long-term benefits of AI. The success of an AI chatbot and Ray-Ban's smart glasses, which gained an AI assistant this week, gave him confidence in the significant investment in the industry. So Meta raised its cost estimates for the year. Capital expenditures will be between $35 billion and $40 billion. Previously, they estimated spending on servers, AI equipment and data centers at $30-37 billion . Second-quarter sales at the company were estimated at between $36.5 billion and $39 billion, which is less than the estimate analysts. These indicators overshadowed a successful first quarter with revenue of $36.5 billion. This is more than 27% more than the same period last year. Profit more than doubled to $12.4 billion.
Disclaimer: Bloomberg periodically changes the percentage of decline in Meta shares before the market open. 15% was as of 5:30 p.m.
The fortunes of Zuckerberg, who owns 13% of the shares, were also affected by the fall in the company's shares. They fell by $25 billion in just one day, writes Business Insider.
If this decline continues after the market opens, Zuckerberg's fortune could fall to less than $150 billion. That would put him in fifth place on Bloomberg's list of richest people, below Microsoft co-founder Bill Gates, assuming Gates' fortune doesn't decline significantly either.