Meta shares fell 15% on Wall Street when it opened on Thursday. This wiped out $190bn from the parent company of Facebook and Instagram. Investors reacted after a promise to increase spending for artificial intelligence.
Mark Zuckerberg (founder and CEO of Meta) said in a Wednesday conference call that the company’s spending on AI technology must increase “meaningfully” for it to generate “a lot” of revenue.
In 2023, shares of Meta were boosted by Zuckerberg’s aggressive action on costs during what he called a “year of efficiency”. Investors have been rattled by a relaxation of this restraint after Meta raised its upper limit of capital expenditure guidance from $37bn up to $40bn on Wednesday.
Meta launched Llama 3 last week, the newest version of its AI model. It also released an image generator which updates images in real-time while users type prompts. Meta AI’s AI assistant is now available in over a dozen countries outside of the US, including Australia. Canada, Singapore and Nigeria. Chris Cox said that Meta’s Chief Product Officer was still “working on the best way to do it in Europe”.
Meta’s share price fell after a record-breaking gain in value in February. The company had added $196bn in stock market capitalisation, a measure for a company’s worth, following the declaration of its first dividend. It was at the time the largest one-day gain on Wall Street.
Nvidia, the world’s leading chip supplier for AI training and operation, smashed this record weeks later with a gain of $277bn.