Meta shares plunge 12%: Key factors behind the sharp drop
Shares of Meta Platforms Inc (formerly known as Facebook) plunged nearly 12 per cent on Thursday after the company's latest quarterly results reignited concerns over its heavy artificial intelligence (AI) investments. The stock was last seen trading 11.87 per cent lower at $662.44.
The social media giant raised its 2025 capital expenditure guidance to a range of $70 billion–$72 billion, up from the earlier $66 billion–$72 billion range, as it accelerates investments in AI infrastructure to compete with industry rivals.
Chief Executive Officer (CEO) Mark Zuckerberg defended the spending, saying the company was already seeing encouraging returns in its core business.
"It's pretty early, but we're seeing the returns in the core business. That's giving us a lot of confidence that we should be investing a lot more," he said.
Zuckerberg mentioned that Meta was aggressively expanding capacity to prepare for the era of superintelligence, which he described as a "generational paradigm shift."
Earlier this year, Meta invested $14.3 billion in AI startup Scale AI and appointed its CEO, Alexandr Wang, to lead its new AI division, Superintelligence Labs, alongside former GitHub CEO Nat Friedman. The company has also signed several new cloud partnerships to bolster its AI infrastructure.
For the quarter ended September 30, Meta reported net income of $2.71 billion or $1.05 per share, sharply lower than $15.69 billion or $6.03 per share reported in the year-ago period. The decline was primarily due to a one-time tax charge, related to US President Donald Trump's signature Bill.
Revenue for the quarter, however, rose 26 per cent year-on-year (YoY) to $51.24 billion.
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