egretmini| Zuckerberg cannot calm Wall Street's nervousness over artificial intelligence spending

ThursdayEgretminiSocial media company MetaEgretminiMark Zuckerberg, the social media company's chief executive, revealed that the social media company was pouring more money into artificial intelligence, spooking investors and sending its shares down more than 10 per cent.

However, in an earnings call on Wednesday, the chief executive tried to allay investor concerns about the company's spending, noting that Meta had taken similar steps in the past in its transition to other new technologies.

Historically, our stocks have fluctuated a lot at this stage of our product strategy, where we have invested in expanding the size of new products but have not yet monetized them. We've seen this in Reels, Stories, the shift from Newsfeed to mobile, and so on, "Zuckerberg said.

But he also acknowledged that Meta's artificial intelligence investment could take years to turn a profit. In January, Zuckerberg announced on Instagram that Meta would buy about 350000 Nvidia H100 artificial intelligence chips by the end of the year. Although Nvidia did not disclose the exact price of its data center chips, it is estimated that the price of each chip is between $20,000 and $40,000. This will bring the estimated cost of Meta to billions of dollars.

Susan Lee, Meta's chief financial officer, supported Zuckerberg in her comments on the earnings report, raising the company's total annual expenditure forecast from $94 billion to $99 billion to $96 billion to $99 billion due to increased infrastructure and legal costs. Li said the company's investment will also increase in the next few years.

"although we will not provide guidance for the next few years in 2024, we expect capital expenditure to continue to increase next year as we invest actively to support our ambitious artificial intelligence research and product development efforts," Li said.

While Wall Street's early reaction to Zuckerberg's comments may deter some investors, experts say these investments are likely to be more rewarding than the company's virtual games in the long run.

There is no doubt that Meta will be fully committed to artificial intelligence, but in order to achieve its vision, the company must invest heavily in infrastructure. Mark Zuckerberg's' look up'is reminiscent of what he once said about virtual worlds, "Mike Prox, vice president and research director of Forrester, said in a statement.

"it's not going well, but it's different from Meta's gamble on virtual reality, because AI now has real and real use cases. The question remains whether Meta can participate in the artificial intelligence competition while maintaining a strong financial position. "

Meanwhile, Ralph Shackett, an analyst at William Blair, said that while Meta's investment in artificial intelligence will take longer and longer than previous expansion, taking action now will put Meta in a better position to compete with competitors.

We believe that [Meta] is still spending cautiously and will eventually become one of the leaders in the artificial intelligence competition. However, it may take some time for further evidence to point to investors, "he wrote in an investor report."

Meta's artificial intelligence investment includes two divisions, one focused on consumers and the other on advertisers. On the consumer side, the company has launched a new Meta AI chat robot that can answer users' general knowledge questions. Then there is Meta AI's client, which allows advertisers to use AI to build advertising campaigns on the company's social platform.

However, all the focus on Meta's artificial intelligence investment obscures the fact that the company's revenue and profit for the quarter still exceeded analysts' expectations, with earnings per share (EPS) of 4.Egretmini.71 US dollars, with an income of 364Egretmini60 million US dollars. Analysts expect Apple to earn $4.30 a share on revenue of $36.12 billion.

However, the company said it expected second-quarter revenue to be slightly lower than the median Wall Street forecast. Meta said second-quarter revenue would be between $36.5 billion and $39 billion; it is estimated to be about $38.24 billion.

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