Meta CEO Mark Zuckerberg warned investors that it will be a long time before generative artificial intelligence (AI) generates significant returns.
The head of Facebook, Instagram and WhatsApp has expected lower profits for the foreseeable future as he tries to keep pace in fast-evolving AI competition with the likes of OpenAI, Microsoft and Google.
Just last week, the social media giant launched its AI assistant across its major platforms.
On Wednesday (April 24), Meta reported a 27% increase in revenue and posted a doubling of profit compared to the first quarter, but that hasn’t allayed investor fears as Zuckerberg continues his AI buying spree. Spending forecasts for the year have risen from £35 billion to $40 billion due to the high costs and computing power required to make progress with new technologies.
This core resourcing will drive investment in AI infrastructure development, including data centers and research costs. Billions have already been spent on GPUs, the chips that handle complex requirements to power AI systems.
Further caution was urged as second-quarter revenue was expected to fall short of analysts’ expectations, adding to investor concerns about the after-hours share price decline. Shares of Meta were down 11% at $493.50.
An optimistic Zuckerberg told analysts Meta “should invest significantly more in the coming years to develop even more advanced models and the largest AI services in the world.” As part of that vision, he believes spending needs to “increase meaningfully before we get big revenues from some of these new products.”
Meta plans to capitalize on AI
The CEO appeared to be aware of investors’ fears over rising spending and falling stock prices as he pointed to Meta’s “strong track record” in monetization. To offset spending commitments, the company is targeting profits through AI advancements in its existing services.
Zuckerberg talked about advances in business messaging, introducing advertising into AI chatbot interactions and increasing group fees to use his larger AI programs. He also vowed to oversee longer-term ambitions to create an avatar-filled metaverse, along with developing wearable devices such as smart glasses with an embedded AI assistant.
Those targets are tempered by steep losses at Reality Labs, Meta’s virtual and hardware arm, with a first-quarter deficit of nearly $3.8 billion and revenue of $440 million.
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