In a recent earnings report by Meta, the tech giant underlined an ambitious plan to become “the leading AI company in the world” accompanied by an upswing in spending on AI. The report presented an overall revenue for the new quarter standing at $36.5 billion, an appreciable leap by 27% as compared to the previous year, nudging slightly ahead of the estimated $36.2 billion. The total expenses for the quarter also saw an uptick of 6%, reaching a final figure of $22.6 billion.
The CEO of Meta, Mark Zuckerberg expressed satisfaction with the company’s trajectory, stating, “It’s been a good start to the year — both in terms of product momentum and business performance”.
However, the earnings report has also caused a degree of consternation among investors, contributing to a 15% decline in share value, following after-hours trading. This concern arises from two notable factors mentioned in the report.
Starting with the forecast for the Q2 revenue which was shy of analyst expectations. The predicted overall sales are earmarked to be in the ballpark of $36.5 billion and $39 billion, the mid-point rendering it less than the average estimate of $38.2 billion. This cautious prognosis has led to rising doubt about Meta’s capacity to maintain its robust performance.
Additionally, Meta’s decision to pump more resources into AI, incorporating elements such as AI training and advanced computing chips in its data centres, is somewhat disconcerting for investors. The company now estimates capital expenditures for the full year of 2024 to hover between $35 billion and $40 billion, a distinct increment from the earlier ballpark figure of $30 billion to $37 billion.
Zuckerberg argued that the increased expenses would allow the company to “continue to accelerate our infrastructure to support our AI roadmap”. His fiscal predictions for the upcoming year remained vague, though he hinted at an even more aggressive investment in AI research and development, as Meta stands toe to toe with rivals like OpenAI and Microsoft.
In line with this plan, Meta recently rolled out the newest version of Meta AI, energized by their latest model, Llama 3. Zuckerberg confirmed the company’s goal with the new release, stating that they intend “to build the world’s leading AI service in both quality and usage.” According to Meta, this iteration of Meta AI is the smartest free AI assistant on the market.
