Meta Platforms’ AI Investment Announcement Causes Stock Plunge, Analyst Calls It an Overreaction
Meta Platforms reported solid financial performance for the first quarter, with revenue reaching $36.45 billion and exceeding analysts’ expectations. However, CEO Mark Zuckerberg’s announcement of ramping up investment in artificial intelligence (AI) caused the company’s stock to decline by 17%.
During his opening statement, Zuckerberg revealed Meta’s plans to increase capital expenditure and energy expenses for AI, indicating a focus on long-term growth. He stated, ‘We’re scaling CapEx and energy expenses for AI, we’ll continue focusing on operating the rest of our company efficiently. But realistically, even with shifting many of our existing resources to focus on AI, we’ll still grow our investment envelope meaningfully before we make much revenue from some of these new products.’
Gene Munster, co-founder and managing partner of Deepwater Asset Management, believes the market’s reaction is an overreaction. He stated, ‘He wants to get investors on the same page, they’re entering a multi-year investment cycle.’
Meta’s focus on AI investment is part of its strategy to strengthen its position in the tech industry. The company intends to further enhance its operational discipline, execution, and advertising performance while pursuing long-term goals in AI and Reality Labs.
Despite the stock plunge, analysts remain optimistic about Meta’s long-term prospects, recognizing the potential of AI investment to drive future growth.
