Meta Shares Tumble as AI Spending Plans Worry Investors

Meta's stock price experienced a significant drop on Wednesday as investors expressed unease over the company's commitment to substantial artificial intelligence (AI) spending amidst declining profits.

The shares of the social media giant, owner of Instagram and Facebook, fell 11% following the release of its quarterly results. The company reported that revenue between April and June increased by 28% compared to the previous year, but profits saw a 14% decrease.

Meta announced plans to invest between $130 billion and $145 billion this year, with a significant portion allocated to AI projects. This represents an increase from the previously projected $125 billion expenditure from three months prior.

Meta CEO Mark Zuckerberg stated that the company's AI initiatives are "accelerating every part of our core business." He also revealed plans to begin selling its AI technology to other businesses. According to Zuckerberg, Meta's AI capabilities and models are currently enhancing engagement on Instagram and Facebook and improving the advertising creation tools for smaller businesses.

Zuckerberg indicated that the development of AI agents, which are described as AI chatbots with a degree of autonomy, is a key focus. He anticipates these agents will form "the next wave of our product line in the months and years to come," adding that soon, "agents that can work 24/7 on your behalf" will be available. He expressed excitement about these advancements and promised further details soon.

Regarding the venture into selling AI models and computing tools to external companies, Zuckerberg noted that the initial step involves making Meta's Muse Spark AI model "easier for companies to integrate." He believes there is a substantial opportunity to build a large business serving other large enterprises, stating, "We have more coding and product tools on our roadmap."

While acknowledging that this new direction requires Meta to flex "a different muscle than we've historically had," Zuckerberg emphasized that the potential financial rewards are too significant to overlook. He further elaborated that the opportunity extends beyond selling computing power to include API and productivity services, characterizing it as a "very, very large opportunity" that the company is intensely focused on.