In after-hours trading, shares of Meta (META) experienced a 15% decline, prompted by a weaker second-quarter revenue outlook and plans for substantial increases in artificial intelligence (AI) expenditure. Susan Li, the company's finance chief, disclosed in the first-quarter results released on April 24 that the second-quarter revenue guidance was anticipated to range between $36.5 billion and $39 billion, falling short of Wall Street's projection of $38.3 billion.
The surge in spending, as outlined by Li, is expected to elevate from $94 billion to $99 billion to address escalating infrastructure and legal expenses. Additionally, Meta plans to raise its full-year 2024 capital expenditures to $40 billion from the previous projection of $37 billion, aiming to "invest aggressively" in AI research and product development.
Despite the revenue outlook, Meta's first-quarter performance showcased a notable growth trajectory, with revenue reaching $36.46 billion, marking a 27% increase year-over-year. Moreover, its earnings per share doubled compared to the previous year, reaching $4.71, surpassing analysts' estimates of $4.32 per share.
However, Meta's Metaverse unit reported a substantial loss of $3.85 billion in the first quarter, albeit marginally lower than the previous year's loss of nearly $4 billion. Forecasts indicate that these losses will expand year over year as Meta allocates funds toward product development in this division. CEO Mark Zuckerberg underscored the strategic importance of AI investment, stating that achieving leadership in this domain will be a significant and multi-year undertaking.
Following the earnings call, Meta shares experienced a notable decline, plummeting 15.4% to $417.22 on April 24. However, despite this setback, Meta's year-to-date performance remains robust, with a 42.5% increase, culminating in an all-time high of $527.34 earlier in April. Additionally, on April 18, Meta introduced the Llama 3 AI model within its Meta AI chatbot across various platforms, including Facebook, Instagram, WhatsApp, and Facebook Messenger, signaling the company's ongoing commitment to advancing AI technology.
