Meta’s miss sparks fears in Tech

A disappointing earnings report from Meta Platforms Inc. has technology investors on edge ahead of results from some of the stock market’s biggest and most important companies in the coming days.

Shares of Facebook’s parent shed as much as 16% Thursday and the tech-heavy Nasdaq 100 Index fell as much as 2%, after Meta forecast weaker-than-expected sales in the current quarter while targeting higher capital expenditures.

“While Meta will employ AI in its work, right now it doesn’t seem to be the biggest beneficiary of AI adoption,” said Jack

Ablin, chief investment officer at Cresset Wealth Advisors. “The disappointment on the revenue side is overshadowing any optimism about AI. It’s hard to tell what the benefit will be to users, and while AI could ultimately mean some cost savings down the line, that isn’t visible yet.”

Alphabet Inc., which reports earnings on Thursday along with Microsoft Corp., were among the biggest decliners, each falling around 5%. Amazon.com Inc., which has results due on April 30, dropped nearly 6%. Meanwhile, social media companies Snap Inc. and Pinterest Inc. slipped more than 4% and 6%, respectively.

Meta’s earnings raise questions that go beyond its specific business to the heart of the broader AI investment thesis, according to analysts at Lynx Equity Strategies.

“For all of this attention on AI, why isn’t the company able to beat June expectations,” analysts KC Rajkumar and Jahanara Ahmed said. “Is the monetisation of gen AI on track with management’s expectations?”

Those concerns weighed on the shares of Super Micro Computer Inc., which slumped as much as 4.5% before paring some losses. Nvidia Corp., the biggest beneficiary of spending on AI computing, fell as much as 1.8% Thursday.

With the losses Thursday, Meta has erased more than $170 billion in market capitalisation.