Meta shares fall as frustration grows over AI spending plans
Meta shares plunged on Wednesday as investors baulked at its promise to maintain spending on artificial intelligence (AI) projects even as profits dwindle. Shares in the firm fell 11% after its results for the quarter from April to June showed revenue grew 28% from a year ago to $61bn (£45.6bn), while profits fell 14% to $6bn. Meta said it would spend $130bn to $145bn this year, mostly on AI projects, up from the $125bn it said it planned to spend just three months ago.
Chief executive Mark Zuckerberg said the company's AI spending was "accelerating every part of our core business" and that it planned to start selling the technology to other businesses. Susan Li, Meta's chief financial officer, told financial analysts that selling its tech to other companies would help it drive returns on its AI spending. She stated, "By 2028, we'll have turned over a lot of cards." Meta's free cash flow for the quarter was $784m, the lowest level of the metric it has posted in at least five years. Analyst Mike Proulx at Forrester said, "What it generated in cash this quarter almost all got eaten by AI infrastructure spending."
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Meta shares are experiencing a downturn as investors express concerns over the company's substantial spending on artificial intelligence projects.
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