Plunge 15% in its stock market valuation, translating to 183 billion euros, recorded Meta – Meta

The stock of Meta, the parent company of Facebook, fell sharply during the week, as the company’s plans to “invest aggressively” in artificial intelligence seem to have seriously upset investors.

The stock fell as much as 15% when the Nasdaq opened, wiping $183 billion off the company’s market valuation. The massive sell-off, which had already begun after the market closed on Wednesday, came as investors brushed aside a stellar first-quarter result and focused on the huge costs of the company’s ambitious plans to become a major player in the artificial intelligence market.

Meta competes with giants such as Microsoft and Google, attempting to unlock the vast prospects of artificial intelligence. While the benefits could prove to be huge, the company’s recent financial results have shown that building the top tools is an extremely expensive and time-consuming process.

The company, which also owns WhatsApp and Instagram, announced on Wednesday that its profits for the first quarter more than doubled compared to the corresponding period last year, while revenues recorded an increase of 27%. But an increase of $5 billion in projected investment in artificial intelligence — and the potential for further increases in the coming years — has investors worried.

Meta announced that capital spending was to be in the range of $35 billion to $40 billion — a previous forecast called for $30 billion to $37 billion — as the company continues to ramp up investment in infrastructure to support AI models and services.

In a communication he had with investors, Mark Zuckerberg, the CEO of the company, focused most of his comments on artificial intelligence. He specifically stated that Meta’s goal is to become “an international leader in the field of artificial intelligence” and that “it is appropriate to invest significantly more in the coming years in order to create even more advanced models.”

Meta would need, according to its chief executive, “substantial investment before we can monetize some of these new products…The upside is that once the AI ​​services we provide reach where appropriate, we have a strong track record of using them effectively,” he added.

Lower-than-expected forecasts for the current quarter may have weighed on investor sentiment. Meta is talking about revenue in the range of $36.5 billion to $39 billion, while analysts’ estimates ranged from $38.2 billion.

Analysts at JP Morgan on Thursday cut their forecast for where the share price will be in December 2024, from $580 to $480.