Quick overview

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Meta’s CEO Mark Zuckerberg rekindled concerns that the historic levels of investment he’s making to catch up in the artificial intelligence race won’t pay off.

This possibility caused shares to plummet. The social media behemoth predicted full-year capital expenditures of $125 billion to $145 billion, surpassing analysts’ projections and representing roughly a 7.4% increase over the company’s January projections.

Chief Financial Officer Susan Li stated on a call with investors on Wednesday that Meta is dealing with “higher component pricing” and additional data center costs, while maintaining its conviction that its AI strategy is working.

Zuckerberg stated that his company would invest hundreds of billions of dollars in AI infrastructure by the end of the decade. Meta has revealed deals worth billions of dollars.

Wall Street did not share Zuckerberg’s “confidence” in the decision to increase AI spending.  The CEO’s failure to explain how Meta intends to generate a return on its investments infuriated investors, causing shares to drop as much as 7% during prolonged trading.

Meta wasn’t the only significant tech company to increase expenditures. Amazon. Com revealed quarterly capital expenditures on increasing data center capacity that exceeded analysts’ expectations.  Google increased its capital expenditures for the entire year to $190 billion.

Google sparked a rally despite beating on quarterly revenue and profit, indicating confidence in the company’s AI bets. Meta beat Wall Street’s estimate of $55.51 billion with first-quarter sales of $56.3 billion. Sales for the current quarter were estimated between $58 billion and $61 billion, which is about in line with expectations. The number of daily active users on Meta’s social media platforms decreased slightly to 3.56 billion in the first quarter.

The business mentioned Russia’s limitations on WhatsApp access and internet outages in Iran. Since the company started using that metric, that was the first decline. Meta would have seen positive, according to CFO Li.