Meta, the parent company of Facebook, had its worst trading day in 18 months after warning investors of years of heavy investment in artificial intelligence (AI). The company’s stock plummeted by over 26% on Thursday, wiping out more than $230 billion in market value.
The sell-off came after Meta’s chief financial officer, Dave Wehner, told analysts on a conference call that the company would be significantly increasing its spending on AI technology in the coming years. Wehner said that Meta would be investing in AI to improve its products and services, including its virtual reality platform, Meta Quest.
Investors were clearly spooked by the news, as Meta’s stock took a nosedive in after-hours trading. The company’s market capitalization dropped to around $620 billion, down from over $850 billion just a day earlier.
While Meta’s stock tumbled, shares of tech giants Microsoft and Google parent Alphabet rallied on Thursday. Microsoft’s stock rose by over 4%, while Alphabet’s stock gained more than 3%. Both companies have been making significant investments in AI technology, and investors seem to be rewarding them for their efforts.
The contrasting reactions to Meta’s AI investment plans highlight the challenges facing the company as it tries to navigate the rapidly evolving tech landscape. While AI has the potential to revolutionize industries and improve the user experience, it also requires significant resources and expertise to develop and implement effectively.
Meta’s CEO, Mark Zuckerberg, has made AI a key focus for the company in recent years, touting its potential to enhance everything from content moderation to virtual reality experiences. However, the company’s latest earnings report and guidance suggest that the road to AI success may be longer and more costly than initially anticipated.
Despite the setback, Meta remains a formidable player in the tech industry, with a massive user base and a strong track record of innovation. The company will need to demonstrate to investors that its AI investments will pay off in the long run and help drive growth and profitability in the years to come.
In the meantime, the tech world will be watching closely to see how Meta navigates the challenges ahead and whether its rivals can capitalize on the company’s missteps. The battle for supremacy in AI is heating up, and Meta’s recent stumble is a reminder that success in this space is far from guaranteed.