Zuckerberg defends AI spending

Mark Zuckerberg rekindled investor fears he won’t control costs at Meta after vowing to increase spending and turn the social media group into “the leading AI company in the world”, sending its shares tumbling more than 15 per cent.

Meta’s earnings release showed revenues at the company — whose platforms include Facebook, Instagram, and WhatsApp — had risen 27 per cent to US$36.5 billion ($61.4b) in the first three months of 2024, just above analysts’ expectations of US$36.2b.

But Meta also raised the high end of its full-year capital expenditure guidance from US$37b to US$40b in order to “continue to accelerate our infrastructure investments to support our artificial intelligence (AI) road map”. Last year capital expenditure spending totalled US$28.1b.

It added it expected capital expenditures to continue to rise next year, and also raised the lower range of its 2024 full-year expenses guidance, from US$94b to US$96b. It has forecast revenues for the current quarter in the range of US$36.5b$39b, versus consensus estimates of US$38.3b.

Last year, the Meta CEO sought to keep Wall Street happy against a backdrop of tough macroeconomic conditions, slashing jobs and cutting costs in a “year of efficiency”.

However, Zuckerberg is increasingly under pressure to keep pace in the fast-moving AI race. Zuckerberg said he believed Meta “should invest significantly more over the coming years to build even more advanced models and the largest scale AI services in the world”. This spending would have to grow “meaningfully before we make much revenue from some of these new products”, he added.