Meta’s stock price tumbled 15% on Wall Street Thursday in response to commitments to ramp up spending on artificial intelligence, resulting in approximately $190 billion being wiped off the market value of the Facebook and Instagram parent company.
During a conference call on Wednesday, Mark Zuckerberg, Meta’s CEO, emphasized the necessity of increasing spending on AI technology in order to generate “significant revenue” from the company’s new AI products. “There is a need for an increase,” he stated.
The stock price of Meta had previously benefited from stringent cost-cutting measures in 2023, which Zuckerberg referred to as “the year of efficiency.” However, investors were spooked when Meta raised the upper limit of its capital spending guidance from $37 billion to $40 billion on Wednesday.
Meta recently launched Llama 3, the latest iteration of its AI model and image generator, which can update images in real-time while users input prompts. This update also sees the expansion of Meta AI, the company’s AI-powered assistant, to more than 10 markets outside the US, including Australia, Canada, Singapore, Nigeria, and Pakistan. Chris Cox, Meta’s chief product officer, mentioned that the company is still working on implementing this in Europe.
The decline in stock price comes after Meta Inc. experienced a record increase in market value in February, adding $196 billion to its market capitalization following the announcement of its first dividend, which was, at the time, the largest single-day gain in Wall Street history. However, Nvidia, a prominent supplier of chips for AI models, later surpassed this record with a $277 billion profit.
Source: www.theguardian.com
