Meta shares fall as frustration grows over AI spending plans - BBC

What the report says

BBC News reported that Meta’s shares dropped sharply in extended trading on Wednesday after investors reacted negatively to the company’s latest artificial intelligence spending plans. The Facebook and Instagram parent said revenue for the April-to-June quarter rose 28% year on year to $61bn, but profit declined 14% to $6bn. Its stock fell as much as 11% after the results.

Meta said it now expects to spend between $130bn and $145bn this year, largely on AI, raising its forecast from $125bn three months earlier. Chief executive Mark Zuckerberg told analysts the investment is helping Meta’s main businesses and said the company plans, for the first time, to sell AI tools and models to other firms. He pointed to future offerings including AI agents, integration of the Muse Spark model, API services and productivity tools.

The BBC cited chief financial officer Susan Li as saying sales to other companies could support returns from Meta’s AI spending, while noting that such businesses have not yet developed. Meta’s free cash flow for the quarter was $784m, described in the report as its lowest in at least five years. Forrester analyst Mike Proulx said investors must judge whether Meta’s AI push is diversification or a distraction, drawing a comparison with the company’s heavy spending on metaverse projects.

The report placed Meta’s results in a wider technology-sector debate over AI infrastructure costs. Google also recently faced investor concern over cash generation, while Microsoft’s shares rose after it reported stronger quarterly sales and profit despite major AI-related capital spending.