Meta Shares Decline As Zuckerberg Says it May Take Years for AI Projects to Pay Off
By late Thursday, April 25, Meta's shares, WhatsApp and Instagram's parent company, had dropped by 19%. This came hours after Mark Zuckerberg said he expected slow growth due to significant AI investments during the first-quarter earnings call.
Even though Meta's first-quarter profit and revenue exceeded Wall Street's expectations -, the company's stock gained 40% this year - investors were unsatisfied because its second-quarter prediction fell slightly short of analysts' predictions, ranging from $36.5B to $39B.
Meta's AI PushMeta intends to boost the AI market by increasing its full-year expenditure plan from $30B to $37B to between $35B and $40B.
There are several ways to build a massive business here, including scaling the business messaging, introducing ads or paid content into AI interactions and enabling people to pay to use bigger AI models and access more compute,' Zuckerberg said, explaining how AI could prove to be profitable.
Meta revealed its plans for a massive $800M data center in January 2024. The center will be optimized to handle AI services.
On the back of Meta's heavy investments, the company is moving quickly into the AI sector. For instance, Meta recently unveiled Llama 3, a giant AI model that aims to power chatbots and other AI services.
Meta first integrated the AI assistant with its social media platforms, including Facebook, WhatsApp, Instagram, and Messenger. This offers AI features like AI stickers and image editing AI.
Thanks to our latest advances with Meta Llama 3, we believe Meta AI is now the most intelligent AI assistant you can use for free. - Meta
Meta rolled out Meta AI (the website) for computers, on April 18. Like OpenAI's ChatGPT, Meta AI can solve math problems, help you draft a more professional-sounding email, hold general conversations, and more.
More AI advancements, like the AI assistant's Imagine' feature, which creates sharper and higher-quality images from texts in real time, were rolled out in beta this month on WhatsApp in the US.
Furthermore, Zuckerberg unveiled the Ray-Ban Meta smart glasses in September last year, even though Google, which introduced smart glasses in 2011, may present fierce competition.
Not to mention Meta's VR headset line. AI developments enabled Meta to revamp and launch Meta Quest 3 on October 10, 2023.
How Significant is Meta's AI Initiative?During the earnings call, Zuckerberg admitted, We've historically seen a lot of volatility in our stock during this phase of our product playbook where we're investing in scaling a new product but aren't yet monetizing it.'
Last week, with the release of a standalone AI chatbot and open-source model, Llama 3, Meta positioned itself as a significant rival to chatbots from firms like Google and OpenAI as they compete to create more powerful systems.
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. - Sophie Lund-Yates
Given how important advertising is to Meta, they have already launched and are using products like Advantage+ Shopping Campaigns, one of the fastest-growing AI advertising products in the company's history.
As Meta's advertising plans gain momentum, the company plans to provide a sandbox where anyone can experiment with designing their own AI later this year.
This sandbox will further act as a testing playground for early versions of generative AI-powered ad tools.
As part of Meta's strategy to expand the metaverse, the company is also beginning to focus more on its augmented and virtual reality offerings.
Meta plans to boost infrastructure expenditure to support its AI agenda which will likely result in higher spending. Meta appears to be working hard in various AI spaces to justify its substantial investments.
This is not the first time Meta's shares have suffered due to aggressive AI investments. However, the company appears ready to absorb the fallout in light of Zuckerberg's remarks during the earnings call.
The post Meta Shares Decline As Zuckerberg Says it May Take Years for AI Projects to Pay Off appeared first on The Tech Report.