In a surprising turn of events, investors have expressed their discontent over Facebook’s parent company Meta’s ambitious investment strategy in artificial intelligence (AI), leading to a staggering $163 billion erosion in the firm’s market value on Thursday.
The plunge came as Meta, led by CEO Mark Zuckerberg, unveiled its quarterly profits, which had doubled year-on-year, accompanied by a substantial 27% surge in revenue. However, despite the positive financial report, Meta’s stock plummeted by 13%, reflecting investor apprehensions towards the company’s future plans.
Meta’s proposal to inject a hefty $5 billion into AI research and development has sparked concerns among investors, who fear the potential risks and costs associated with such a move. The Menlo Park-based tech giant’s intention to stay ahead in the fiercely competitive global technology landscape, facing stiff competition from industry heavyweights like Microsoft, Google, and OpenAI, has raised eyebrows.
“While Meta’s bold AI aspirations seem promising, the market seems jittery about the scale and implications of such an investment,” remarked Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, in a statement to CNN.
Lund-Yates emphasized the critical importance of Meta’s core advertising business, suggesting that diverting resources to AI ventures might undermine the company’s dominant position in the digital advertising sphere. She stressed the need for Meta to strike a balance between innovation and safeguarding its existing revenue streams.
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