Investors apparently did not approve the Facebook’s parent company Meta’s plans to pour large sum of money into artificial intelligence (AI), wiping off $163 billion of the firm’s market value Thursday.
The share price of Mark Zuckerberg’s Meta nosedived 13% as the company reported the profits of this quarter that were doubled on a year-on-year basis, with revenue increasing 27%.
The Menlo Park-based tech behemoth planned to invest $5 billion in AI as the global technology competition has jumped to another level with Microsoft, Google, OpenAI, and other famous investors jumping in to stay ahead in the race.
Despite the projections that the return on the AI investment would be massive, it is reported that the equipment necessary for such a plan will take and the cost would also be high.
“The language around spending plans has become bolder once more, and this could be what’s spooking markets,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, was quoted in a CNN report Thursday.
“For all Meta’s bold AI plans, it can’t afford to take its eye off the nucleus of the business — its core advertising activities… Meta’s resources are vast but not infinite, and its digital advertising market share needs defending at all costs,” she added.
According to the tech behemoth, the full-year expanse is estimated in the $35-$40 billion range, a considerable increase from the previous projections, as already said by Meta.
