Earnings
Home›Earnings›Results›Meta shares drop as AI spending plan weighs on profits
Meta shares drop as AI spending plan weighs on profits
The company forecast 2024 AI spending of $130 billion to $145 billion, while quarterly free cash flow fell to $784 million, its lowest in at least five years.
Meta shares fell sharply after investors questioned whether the company can sustain high AI spending as profits decline, according to BBC Business. The stock dropped 11% following Meta's April to June results.
Meta reported revenue of $61 billion for the quarter, up 28% year over year, but profit fell 14% to $6 billion. Meta also said it plans to spend $130 billion to $145 billion this year, mostly on AI projects, after previously indicating $125 billion for the prior outlook.
On a call with analysts, Meta CEO Mark Zuckerberg said the company intends to start selling AI tools to other businesses for the first time. Meta CFO Susan Li said offering its technology to other companies would help drive returns on its AI spending.
BBC Business also reported that Meta's free cash flow for the quarter was $784 million, the lowest level the company has posted in at least five years. Zuckerberg said Meta is using its AI models to boost engagement on Instagram and Facebook, and he discussed developing AI agents that could work more autonomously.