Meta’s shares drop by 10pc on Thursday after investors baulked at Mark Zuckerberg’s plans for a $145bn (£108bn) AI spending blitz.
The fall, which wiped $150bn off the company’s value, came after it disclosed it would spend up to $10bn more than it had forecast previously on a vast network of data centres.
Meta raised its capital expenditure forecast, which covers costs such as infrastructure and technology hardware, from up to $135bn to up to $145bn this year.
Investors have been closely watching the spending plans of Silicon Valley giants amid concerns their blitz on AI infrastructure could prove unsustainable.
Mr Zuckerberg has pledged to spend as much as $600bn on AI in the coming years as he looks to chase down OpenAI’s ChatGPT in the race for digital superintelligence. He has laid out plans to build a series of city-sized data centres to power his company’s AI advances.
Wall Street analysts trimmed their valuations for Meta’s shares because of concerns about its spending plans and a lack of clarity about its AI product plans. Jeff Wlodarczak, an analyst at Pivotal Research, said the potential return on “Meta’s massive AI spend appears to be far more uncertain” than for rivals such as Google.
Wednesday night saw four of the US’s technology giants disclose their results in a nervy week for technology investors after some of Wall Street’s biggest AI names suffered a sell-off.
Shares in Microsoft and Amazon each dropped by about 1pc in after-hours trading. Microsoft recorded an 18pc increase in quarterly profits to $31.8bn, driven by its AI cloud offerings, while Amazon’s profits climbed 76pc to $30.2bn.
Shares in Alphabet, Google’s parent company, climbed by more than 5pc after it disclosed its profits had almost doubled to $62.5bn. Sundar Pichai, Google’s chief executive, said its AI investments were “lighting up every part of business”.
Looming job cuts
However, Meta’s vast spending plans disappointed investors even as the social networking giant posted a 33pc increase in revenues to $56.3bn and a profit boost of 61pc to $26.8bn.
The results also come as the company prepares to cut up to 8,000 staff next month, even as its AI spending continues to crank up.
“We’re on track to deliver personal superintelligence to billions of people,” Mr Zuckerberg said.
Reports that OpenAI, the developer of ChatGPT, had fallen behind in its user numbers and revenue targets sent tremors across the shares of tech giants earlier this week, knocking companies including Microsoft, Nvidia and Oracle.
Earlier this week, The Wall Street Journal reported that OpenAI had failed to hit its growth aims of reaching one billion users by the end of last year. OpenAI rejected the claims, insisting its products were “firing on all cylinders” and it had seen strong growth for its new coding tool, Codex.
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