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Meta shares slide after investors question AI spending pace
Meta forecast 2024 AI spending of $130bn to $145bn, while quarterly free cash flow fell to $784m, its lowest level in at least five years.
Meta shares fell sharply after investors reacted to the company behind Facebook and Instagram, Meta Platforms, as it outlined plans to keep accelerating AI spending even as profitability weakens, according to BBC Business. The stock dropped 11% following Meta's second-quarter results, when revenue rose 28% year over year to $61bn but profits fell 14% to $6bn. Meta also said it would spend $130bn to $145bn on AI projects this year, up from its earlier plan of $125bn made just three months earlier.
On a call with analysts, Meta CEO Mark Zuckerberg said the company intends to start selling AI technology to other businesses for the first time, framing the move as a way to improve returns on its AI investment. Meta's CFO, Susan Li, said that selling its tech would help monetize the spending, even though these lines of business have not yet materialized.
The report also pointed to cash flow pressure, with Meta's free cash flow for the quarter at $784m, the lowest level it has posted in at least five years. Zuckerberg added that Meta's AI models are driving engagement on Instagram and Facebook and boosting advertising tools for smaller businesses, and he described ongoing development of AI agents that could work more autonomously.