Meta Stock Plunges as Company Promises AI Splurge

Meta, the parent company of Facebook, Instagram, and WhatsApp, saw a major drop in its stock value, plummeting by approximately 13% in premarket trading. This sharp decrease posed a threat to reduce its market value by nearly $163 billion. 

Despite reporting a profit that more than doubled from the previous year and a 27% increase in revenue during the first quarter, Meta's aggressive investment strategy in artificial intelligence has caused concern among investors.

The large technology company has recently revealed its plans to increase its spending on AI by up to $5 billion. This decision is a response to the growing competition in the AI sector, as the company aims to compete with other major players such as Microsoft and Google.

However, while these investments hold the potential for significant returns, some shareholders are expressing concern about the immediate financial burden and extended timeline required to develop advanced AI tools. 

Industry analysts have highlighted that Meta's recent surge in spending, particularly in the field of AI, may be causing concerns in the markets. To address this, the company is placing a greater emphasis on maintaining its focus on core business sectors, such as digital advertising, which is crucial for generating revenue.

Meta has recently adjusted its capital expenditure forecast for the full year, raising it to between $35-40 billion from the previous estimate of $30-37 billion. This adjustment is part of the company's strategy to increase investments in its infrastructure, which is essential for supporting its ambitious AI projects.