Mark Zuckerberg has once again appealed to investors for patience as the company pushes into artificial intelligence (AI). Despite his efforts to reassure Wall Street, Meta's disclosure of plans to increase investment in AI, alongside slower-than-expected sales growth, triggered a decline in the company's stock price during premarket trading on Thursday, according to VCPost.
In a report by Yahoo Finance, Zuckerberg, known for his belief in the long-term payoff of bold technological investments, reiterated his confidence in Meta's AI-driven future during a conference call following the release of the company's first-quarter earnings report.
Specifically, he detailed that Meta's products have the potential to reach a large audience and generate revenue through its AI initiatives, even if the profits are not immediately evident. In other words, investors should be able to see the long-term value and revenue-generating potential of Meta's AI efforts.
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Investors on Meta's AI Ambitions
However, it caught investors off guard, particularly considering Meta's recent emphasis on aggressive cost-cutting measures for improved profitability.
Before the announcement, Meta's stock had been performing strongly, showing a 39% increase year-to-date and trading near all-time highs for the past month. However, the revelation of increased spending and slower sales growth rattled investors, leading to the largest intraday decline in Meta's stock since October 2022, potentially wiping out approximately $185 billion from the company's market value.
Zuckerberg also mentioned that AI development has high costs, but the company will remain steadfast in its AI-driven vision regardless.
To achieve investor confidence, he pointed to recent achievements, including the success of Meta's AI chatbot and Ray-Ban smart glasses, as evidence of the company's progress in this area.
In addition to AI, Meta's annual spending plans are expected to bloat from $35 billion to $40 billion, most coming from research and product development efforts. Focusing on this, analysts caution against losing sight of Meta's core advertising activities amidst its bold AI initiatives.
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