Meta's stock dips as it plans billions more in AI
What's the story
Meta, the parent company of Facebook and Instagram, has witnessed a major dip in its stock price. The company's shares fell by 7% in after-hours trading after announcing plans to increase its artificial intelligence (AI) project spending by billions of dollars. This comes as part of a wider trend among top US tech firms investing heavily in AI technology.
Financial strategy
Meta's planned capital expenditure revised
Meta has revised its planned capital expenditure for AI projects from a maximum of $135 billion to as much as $145 billion. The company's CFO, Susan Li, admitted that they had "underestimated our compute needs" in the past and need to invest more money to meet them. However, CEO Mark Zuckerberg was less specific about how this spending would yield results in the future.
Strategic outlook
Potential job cuts at Meta
Zuckerberg expressed confidence in the direction of Meta's AI projects, particularly its Superintelligence Lab. He also hinted at possible major job cuts at the company, saying that "We are seeing more and more examples where one or two people are building something in a week that would have previously taken dozens of people months..." When asked about potential layoffs, Li said they don't know what the optimal size of their future workforce will be.
Market response
Tech giants continue to invest in AI
Along with Meta, Alphabet, Microsoft, and Amazon also reported their quarterly earnings. However, the latter three companies performed better as they showed how their massive AI investments were starting to pay off. Despite these concerns over sustainability amid high costs and unrealized gains from AI investments, tech firms are continuing to invest billions into its development this year and next.