It was not a good night for Meta stock! Late Wednesday, shares dipped after their quarterly earnings came out. See, Wall Street predicted some crazy high numbers.
While Meta technically did better than predicted for sales and profits so far, their outlook for the next quarter just wasn't hype enough. Execs said sales probably wouldn't blow past forecasts like investors wanted.
It seems expectations were through the roof for Meta's business. But giving lighter predictions for upcoming revenue must have disappointed some folks on Wall Street. As a result, the price of Meta stock dropped after the not-so-exciting update. I guess living up to wild hopes on the Street is tough work!
Meta is pouring money into becoming the top dog of AI through their master plan, but it's costing them big time. The company, based in Menlo Park, upped how much they'll spend overall this year to fund their "AI roadmap."
All the added expenses joined with those lighter sales predictions to sink Meta stock hard in after-hours trading. The price fell over 16%! That's a massive stumble even though the company actually did beat Wall Street's big goals for the most recent quarter.
Their earnings per share and total sales for the past few months came in higher than what the analysts on Wall Street projected. But all the extra AI bucks and the so-so outlook overshadowed beating the forecasts. Investors clearly weren't a fan of the expensive plans and tepid guidance hitting their wallets.
Mixed Guidance Hits Meta Stock
Meta's prediction for the next quarter might explain why their stock took such a dive. They said sales will likely land between $36.5 billion to $39 billion, averaging $37.75 billion.
Problem is, Wall Street was banking on $38.25 billion. So Meta's guidance was well below what the analysts wanted. Not a good look!
Plus, the forecast of around 18% year-over-year revenue growth would be Meta's lowest rate of expansion in the past few quarters. Experts knew growth was slowing, but it still disappointed.
Then there's the skyrocketing costs Meta warned about. Even though analysts expected expenses to rise, maybe the huge hike came as a shock to some investors holding Meta stock. Between the so-so outlook and surging spending, shareholders bailed fast after the closing bell.
Meta AI is Meta's research organization dedicated to building advanced artificial intelligence technologies. Their projects include:
-
Developing conversational AI assistants like Meta's Anthropic chatbot, which can understand language and have natural discussions.
-
Building large language models for tasks like summarization, translation and answering questions. Meta has released models like ChatGPT and OPT which demonstrate these abilities.
-
Conducting research into self-supervised learning - training models on gigantic datasets without human labels. This could lead to even more capable AI in the future.
-
Creating tools like Constitutional AI to help ensure AI systems are helpful, harmless, and honest. Meta wants to build AI that benefits all of humanity.
Meta AI brings together world-leading researchers and engineers to push the boundaries of AI through ambitious projects. Their goal is developing advanced AI that people can use, trust and feel helps them in their daily lives. Only time will tell just how far they can take these exciting technologies!