Wall Street is furious with Meta CEO Mark Zuckerberg after the super tech company’s stock plummeted as much as 16% this past Thursday. Meta’s shares haven’t seen that big of a drop since October of 2022, and despite Meta’s recent cost cuts which have increased profits greatly, this drop took many investors by complete surprise.
The recent detrimental share losses are attributed to Meta’s heightened push for AI technology investments, in which Mark Zuckerberg begs investors for patience, claiming the advancements will pay off greatly. Just before its stock dropped, Meta announced that it would be spending billions of more dollars than usual this year. These large sums of money are solely for investments in advancing AI technology within Meta.
The recent push for more AI from Meta appears to be a part of an “arms race” between Meta and its tech giant rivals like Microsoft and Alphabet Inc. Since the success of the recent AI Chatbot ChatGPT, the Meta CEO has made advancing artificial intelligence within its products and services a top priority. Mark Zuckerberg did his best to reason with angered investors by claiming that they would be smart to stick around to see the great profits of AI in the future. However, he did warn shareholders that it would certainly take a long time, even years to see these profits.
Meta shared that they have raised the estimates of costs for 2024, believing their capital expenses will cost the company anywhere from $35 billion to $45 billion, a large jump from the originally projected $30-$37 billion. These expenses are planned to cover an array of tools for Meta, including an $800 million data center. To ease frustrated investors and compensate for their losses, Meta announced a $50 billion stock buyback. Meta has implemented AI into many of their products, but unfortunately, the company’s influx of spending on the technology has yet to pay off for investors.
