Meta Platforms’ stock is down 4% after the company announced plans to increase its investments in artificial intelligence (A.I.) technologies.
News of the increase in A.I. spending comes as the company known for its social media platforms such as Facebook announced third-quarter financial results that beat Wall Street forecasts.
Meta reported earnings per share (EPS) of $6.03 U.S., which was much better than the $5.25 U.S. expected among analysts.
Revenue in the quarter totaled $40.59 billion U.S., which topped the $40.29 billion U.S. consensus view on Wall Street. Sales were up 19% from a year earlier.
The company reported 3.29 billion daily active people on its social media platforms for the third quarter, up 5% year-over-year but below analysts’ expectations of 3.31 billion.
However, what has really pressured the stock is that Meta raised its capital expenditures guidance for the current 2024 fiscal year to between $38 billion U.S. and $40 billion U.S.
That’s up from previous guidance of $37 billion U.S. to $40 billion U.S.
On an earnings call with media and analysts, management said that they anticipate capital expenditures to continue growing in 2025.
Meta has been building data centres to provide the technology infrastructure needed to support it’s A.I. technologies.
Management said they expect total expenses for fiscal 2024 to be between $96 billion U.S. and $98 billion U.S.
Meta’s advertising revenue during Q3 totaled $39.9 billion U.S., up 18.7% from a year ago. Advertising accounted for 98.3% of Meta’s total revenue in the period.
Looking ahead, the company said that it expects fourth-quarter revenue of $45 billion U.S. to $48 billion U.S. The midpoint is higher than the analyst consensus of $46.3 billion U.S.
Offsetting the growth were results from Meta’s Reality Labs unit, which posted an operating loss of $4.4 billion U.S. in Q3.
Since 2020, Reality Labs, which focuses on developing new technologies, has lost more than $58 billion U.S.
Prior to today (Oct. 31), Meta Platforms’ stock had gained 70% this year and was trading at $591.80 U.S. per share.
