Meta Stocks Dive 15%, Zuckerberg Pledges Bold AI Push

Meta Stocks Dive 15%, Zuckerberg Pledges Bold AI Push

Meta, the parent company of Facebook, saw its stocks plunge nearly 15% on Thursday after announcing plans to ramp up spending on artificial intelligence projects. Mark Zuckerberg, the CEO of Meta, disclosed the company’s intention to “invest aggressively” in AI, triggering a wave of investor concern that sent the tech giant’s stock tumbling by 13.5% to $427 by 11:30 am ET.

The significant drop in stock value not only posed a threat to Meta’s market capitalization, risking a loss of around $200 billion but also impacted Zuckerberg’s personal wealth. The billionaire tech mogul witnessed a staggering $730 million wipeout, causing his net worth to dip below that of his rival, Elon Musk, on the Bloomberg Billionaire Index.

Despite drawing a mere $1 salary from Meta in 2023, Zuckerberg’s estimated fortune of $175 billion, primarily tied to his 13% stake in Meta, puts him slightly behind Musk in the wealth rankings.

The announcement of investing an additional $5 billion in AI projects and raising the annual capital expenditure to $35 billion-$40 billion led to a mixed response from investors. Meta’s focus on AI, while promising long-term benefits, raised concerns about the company’s profitability in the near future. Zuckerberg acknowledged that the heavy investment in AI might delay revenue generation from new products but emphasized the potential for lucrative returns once these services gain traction.

Analysts pointed out that investors have begun questioning Meta’s substantial AI spending, which could take years to yield substantial profits. However, experts like Jasmine Enberg, a principal analyst at Insider Intelligence, believe that Meta’s vast user base across its existing platforms could give it an edge in monetizing AI services through its advertising ecosystem.

Despite the skepticism surrounding Meta’s AI strategy, previous quarters saw the company’s stock soar and market capitalization hit record highs. Following the latest developments, Zuckerberg remains confident in the profitability of Meta’s AI ventures once they reach a scalable stage, citing the company’s history of effectively monetizing new services.

Amidst the tech industry’s AI race, Meta faces stiff competition from tech giants like Google and Microsoft, which has a substantial partnership with OpenAI, the creator of ChatGPT. Microsoft’s plan to invest up to $100 billion in an AI data-center project, including the development of an AI supercomputer named “Stargate,” underscores the intense competition and massive investments pouring into AI research and development.

As Meta continues to navigate the evolving tech landscape and intensifies its AI pursuits, the future remains uncertain yet filled with opportunities for the tech behemoth to solidify its position in the ever-growing AI market.

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