Zuckerberg defends Meta’s AI spending spree as shares tumble

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Meta’s revenues jumped by more than a quarter in the first three months of the year, beating expectations, but its forecasts left Wall Street underwhelmed and the shares fell 10 per cent in after-hours trading on Wednesday.

Revenues at the social media group rose 27 per cent to $36.5bn, just above analyst expectations of a rise to $36.2bn.

Meta said it had raised the high end of its full-year capital expenditure guidance from $37bn to $40bn in order to “continue to accelerate our infrastructure investments to support our artificial intelligence (AI) roadmap”. It added that it expected capital expenditures to “continue to increase next year”.

It said it anticipated current quarter revenues in the range of $36.5bn-$39bn, versus consensus estimates of $38.3bn.

Prior to the announcement, Meta’s stock had risen more than 40 per cent this year, having been in record territory since a bumper fourth-quarter earnings announcement in February during which it announced its first dividend and signalled a strong recovery from a recent advertising slump. 

Chief executive Mark Zuckerberg has been attempting to keep investors happy and cut costs while investing in the artificial intelligence race, its longer-term metaverse ambitions and the costly technology and infrastructure required to support both.

This month Meta released a new version of its AI model, Llama 3, which it said had vastly improved capabilities, including the ability to reason. The company also unveiled a new generation of its AI custom-made chips.  

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