Meta (META) shares dropped 15% in after-hours trading after a weak outlook for Q2 revenue and plans to “aggressively” ramp up spending in artificial intelligence (AI) this year — while its metaverse division is expected to continue to run at a loss.
The tech giant’s financial chief, Susan Li, said in its April 24 Q1 results that its revenue guidance for the Q2 falls between $36.5 billion and $39 billion — below reported Wall Street expectations of $38.3 billion.
Li expects expenses to rise to between $96 billion to $99 billion — up from $94 billion to $99 billion due to “higher infrastructure and legal costs.”
She also bumped full-year 2024 capital expenditures to a top end of $40 billion from its prior $37 billion as it would “invest aggressively to support our ambitious AI research and product development.”
Meta posted Q1 revenues of $36.46 billion — a 27% year-on-year (YOY) jump that surpassed Wall Street analysts’ Zacks estimate of $36.28 billion by 0.48%.
Its earnings per share doubled YOY to $4.71, beating estimates of $4.32 per share.
Its metaverse building Reality Labs lost $3.85 billion in Q1 — down from the nearly $4 billion it lost in Q1 2023; Meta expects these losses to increase YOY as it bankrolls the division’s product development.
“An increasing amount of our Reality Labs work is going toward serving our AI efforts,” said CEO Mark Zuckerberg on an earnings call.
He expected a “multi-year investment cycle” before Meta “fully scaled” its AI businesses.
Related: UK watchdog worries about tech giants’ AI market control
“Building the leading AI will also be a larger undertaking than the other experiences we’ve added to our apps and this is likely going to take several years,” Zuckerberg said.
Meta shares slid 15.4% on April 24 to $417.22 following it closing the day down 0.5% at $493.50, according to Google Finance.
Meta is, however, still up 42.5% year-to-date after hitting an all-time high of $527.34 earlier this month on April 5.
On April 18, Meta launched its Llama 3 AI model, which it rolled out in its Meta AI chatbot, available across Facebook, Instagram, WhatsApp and Facebook Messenger.
The Meta AI chatbot is reported to have posted bizarre interactions, telling a Facebook group for New York mothers that it has a child.
Meta, however, claimed human evaluators ranked Llama 3 higher than other models, including OpenAI’s ChatGPT-3.5.
Magazine: How to get better crypto predictions from ChatGPT, Humane AI pin slammed: AI Eye