Mark Zuckerberg, CEO of Meta, formerly known as Facebook, embarked on the company’s earnings call with a focus on artificial intelligence (AI) and the Metaverse Investments highlighting Meta’s ambitious ventures into emerging technologies. However, despite reporting better-than-expected profit and revenue for the first quarter, investors responded negatively, leading to a significant decline in Meta’s share price, plunging as much as 19% in extended trading on Wednesday and wiping out over $200 billion in market capitalization.
Zuckerberg acknowledged the volatility in Meta’s stock during phases of product expansion, attributing it to the period when the company invested in scaling new products without immediate monetization. Despite Meta’s reliance on digital advertising, accounting for 98% of its revenue, Zuckerberg emphasized prospects for ad monetization, particularly within AI-driven interactions.
Share Price Plummets Despite Strong First Quarter Results Due to Metaverse Investments
During the earnings call, Zuckerberg discussed Meta’s endeavors in AI development, including Meta Llama 3, the company’s latest large language model, and Metaverse Investments in AI, its response to OpenAI’s ChatGPT. He also outlined potential expansion opportunities in the mixed reality headset market, highlighting Meta’s recent opening of the operating system powering its Quest headsets to accelerate growth within the mixed reality ecosystem.
Moreover, Zuckerberg touted Meta’s augmented reality (AR) glasses as an ideal platform for AI assistants, envisioning seamless integration with users’ sensory experiences. However, Meta’s Reality Labs unit, responsible for developing hardware and software for the metaverse, continued to incur substantial losses, reporting sales of $440 million and cumulative losses exceeding $45 billion since the end of 2020.
Despite the stock plunge, Meta’s share price experienced significant growth in 2023, almost tripling over the year, reflecting renewed investor confidence following a tumultuous period in 2022. Zuckerberg’s cost-cutting initiatives and efficiency measures contributed to Meta’s resurgence, with a focus on reallocating resources toward AI investments to drive future growth.
Zuckerberg Foresees Long-Term Investment in AI, Stakes High for Meta’s Future
Looking ahead, Meta anticipates capital expenditures of $35 billion to $40 billion for 2024, signaling a substantial increase to accelerate infrastructure investments supporting its AI roadmap. Zuckerberg acknowledged the prolonged investment cycle required for AI products to scale into profitable services but expressed confidence in Meta’s track record in this regard.
Meta’s finance chief, Susan Li, echoed Zuckerberg’s sentiments, underscoring the need for advanced AI models and product scalability before driving meaningful revenue. Despite Metaverse Investments forecast for the second quarter dampening investor sentiment, Zuckerberg reassured investors of the long-term benefits of investing in Meta’s AI-driven initiatives.
While acknowledging the challenges ahead, Zuckerberg emphasized the potential rewards for investors who remain committed to Metaverse Investments highlighting the transformative impact of building a leading AI. As Meta navigates its journey towards AI-driven innovation, the stakes are high, with long-term investment in emerging technologies shaping the company’s future trajectory and market performance.
