Meta shares fell 15% when Wall Street opened on Thursday, erasing about $190 billion from the value of the parent company of Facebook and Instagram, as investors reacted to a promise to increase spending on artificial intelligence.
Mark Zuckerberg, Meta’s founder and CEO, said in a conference call Wednesday that technology spending would have to grow “significantly” before the company could make “a lot of revenue” from new AI products.
Meta shares were boosted in 2023 by Zuckerberg’s tough measures on costs in what he described as a “year of efficiency.” An easing of that restriction has rattled investors after Meta raised the upper limit of its capital spending guidance on Wednesday, from $37 billion to $40 billion.
Last week, Meta launched Llama 3, the latest version of its AI model, along with an image generator that updates images in real time as users type directions. The company’s AI-powered assistant, Meta AI, is expanding to its platforms in more than a dozen markets outside the US with the update, including Australia, Canada, Singapore, Nigeria and Pakistan. Chris Cox, Meta’s chief product officer, said the company is “still working on the right way to do this in Europe.”
The stock drop follows a record gain in Meta’s market value in February, when the company added $196 billion to its market capitalization – a measure of a company’s value – after declaring its first dividend. At the time it was the largest daily gain in Wall Street history.
However, weeks later, Nvidia, the leading supplier of chips for training and operating AI models, broke that record with a profit of $277 billion.