Meta Shares: There was a huge fall in the shares of Meta Platforms Inc., the parent company of Facebook, Instagram and WhatsApp, on Thursday 30 October. After the company’s quarterly results, investors’ concerns related to investing in Artificial Intelligence (AI) resurfaced. Due to this, its shares saw a decline of about 12%. At the time of writing, the company’s shares were trading at $662.44, which was 11.87% below its previous closing price.
Concern increased due to huge investment in AI infrastructure
Meta has raised its capital expenditure estimate for fiscal year 2025 to between $70 billion and $72 billion. Earlier this estimate was between $66 billion and $72 billion. The purpose of this increased expenditure is to strengthen the AI infrastructure and compete with companies like Google, Microsoft and OpenAI.
The company’s CEO Mark Zuckerberg defended this huge expenditure, saying, “It is still early stages, but we are seeing positive results from AI in our core business. That is giving us the confidence to invest more in this area.” He further said that META is working to increase its capabilities for the “era of superintelligence”, which he described as “a generational change”.
Big bet on AI
Meta invested $14.3 billion in AI startup Scale AI earlier this year. Along with this, the company has made Scale AI CEO Alexander Wang the head of its new Superintelligence Labs division, where former GitHub CEO Nate Friedman is also working with him. Additionally, Meta has also signed several new cloud partnership agreements to further strengthen its AI network.
huge decline in profits
Meta’s net profit declined to $2.71 billion in the September quarter, which was $15.69 billion in the same quarter last year. The company’s earnings per share (EPS) also declined from $6.03 to $1.05. The company said the decline was primarily due to a one-time tax charge related to a signature bill of US President Donald Trump.
26% increase in revenue
However, despite the decline in profits, the company’s revenue showed improvement. Meta’s revenue grew 26% during the quarter to $51.24 billion. This growth mainly came from digital advertising business and Reels and WhatsApp monetization.
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