Meta predicted Wednesday that its current quarter revenue will be lower than Wall Street expectations, and plans to spend billions more on artificial intelligence efforts despite reporting solid revenue and profits in the first three months of the year. He said he would throw a .
The company, which owns Facebook, Instagram, WhatsApp and Messenger, had first-quarter sales of $36.5 billion, up 27% from $28.6 billion a year earlier, according to data compiled by FactSet. That was slightly higher than the city's forecast of $36.1 billion. Profits totaled $12.4 billion, more than double the $5.7 billion reported in the same period last year.
But Meta's AI efforts require significant computing power and come at a high price. The Silicon Valley company said it plans to raise its spending forecast for this year to $35 billion to $40 billion, up from its previous estimate of $30 billion to $37 billion. This move was driven by significant investments in AI infrastructure, including data centers. chip design. and research and development.
Mehta also predicted that sales for the current quarter would be between $36.5 billion and $39 billion, lower than analysts expected.
Meta's stock price fell more than 16% Wednesday afternoon, closing regular trading at $493.50, as the combination of higher spending and lower-than-expected earnings spooked investors.
“Meta's results should serve as a stark warning for companies reporting this earnings season,” said Thomas Monteiro, senior analyst at Investing.com. He said that while the company's results were strong, this quarter's “lower revenue estimates were not as much of an issue as reported.” I'm keeping an eye on it,” he added.
In recent years, the meta has been in constant transition, increasingly positioning itself as poised to take advantage of AI. The explosion in generative AI that can generate text, video, audio, and images has led to a surge in interest in this technology. Meta CEO Mark Zuckerberg has spent years investing in driving advances in AI, some of which have improved the company's advertising system and boosted its revenue.
After OpenAI releases its ChatGPT chatbot in 2022, Zuckerberg plans to incorporate AI-powered products into nearly every corner of his empire, from Instagram and Facebook search tools to image generation software and smart glasses. refocused. Last week, Meta announced a new version of his software, his AI-powered smart assistant built throughout his apps.
Zuckerberg has also invested billions of dollars in graphics processing units (GPUs), chips that can perform complex calculations to power artificial intelligence systems.
But Meta continues to spend billions chasing Zuckerberg's vision of an immersive digital world called the Metaverse. Reality Labs, Meta's hardware division, posted a loss of about $3.8 billion in the first quarter, while selling virtual reality and augmented reality goggles and software, as well as Horizon, the operating system for its VR headsets. '', which generated revenues of $440 million.
Zuckerberg said on a conference call with investors Wednesday that the company's Ray-Ban smart glasses, an effort by Reality Labs, were an early success, with some styles selling out in some markets. Meta recently updated its glasses with AI software that acts as a kind of voice assistant that can answer questions and translate text into different languages.
The meta has experienced some ups and downs in recent years. After a surge in users and activity during the first coronavirus lockdown, the company's business was hit by a decline in the digital advertising market in 2022. Last year, Mr. Zuckerberg introduced a cost-cutting program that cut the company's costs by about a third. Flattening of the workforce and middle management.
Since then, revenue has skyrocketed as the advertising market recovers and more people use the company's apps regularly.
Meta announced Wednesday that more than 3.24 billion people use at least one of its apps every day. Zuckerberg specifically singled out WhatsApp during the investor call, noting that the messaging service is one that people use regularly.
He also gave a message to Meta's shareholders: “Please be patient.” “Historically, we've seen a lot of stock price volatility at this stage of our product strategy,” he said on a conference call with investors.
He pointed to Reels, Meta's TikTok-like video product, and Stories, the company's defunct photo and video messaging service. Although these capabilities were not immediately profitable, they grew quickly and ultimately proved profitable, he said. Zuckerberg said Meta typically focuses on developing new products that can be used by as many people as possible before worrying about how to make a profit.
The money will come, he added.
“We should all be pretty confident that if these things scale well, they're going to end up being very large businesses,” he said.