(Bloomberg) — Meta Platforms Inc. raised its spending estimates for the year and projected second-quarter sales below Wall Street expectations, once again raising questions about whether its futuristic technology bets will ultimately pay off. fruits for investors.
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Parent company Facebook reported first-quarter revenue of $36.5 billion, an increase of more than 27% from the same period last year. This is a slight excess since analysts were expecting a turnover of $36.1 billion on average, according to estimates compiled by Bloomberg. Profit more than doubled to $12.4 billion, or earnings per share of $4.71.
But the Menlo Park, Calif.-based social media company also expects revenue between $36.5 billion and $39 billion for the second quarter. Analysts expected $38.2 billion. At the same time, Meta increased its expected costs for the year and now estimates its capital spending will be between $35 billion and $40 billion. Earlier this year, he estimated that spending on things like servers, AI hardware and data centers would be between $30 billion and $37 billion.
“We expect capital spending to continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts,” Chief Financial Officer Susan Li said in a statement.
Shares fell 11% in extended trading. The stock was up 39% so far this year at market close and trading near all-time highs over the past month, partly reflecting enthusiasm for AI.
Meta has spent aggressively to compete in AI with other technology rivals such as Microsoft Corp. and Alphabet Inc., which explains part of the increase in costs. The company announced plans in January to build a new $800 million data center and is also developing its own chips for artificial intelligence services. Meta is also working on several new iterations of its large language model, known as Llama, to power chatbots and other AI services.
During the previous quarter, CEO Mark Zuckerberg announced a $50 billion stock buyback in addition to the company’s first-ever quarterly dividend, in an effort to appease investors frustrated by the company’s aggressive spending. technology company that has not yet borne fruit. Zuckerberg has spent years pouring money into building what’s called the Metaverse, a virtual world that he hopes people will one day play and work in.
Reality Labs, the Meta division focused on its futuristic bets, reported a loss of $3.85 billion for the first quarter, about the same as a year ago. That division, which also oversees Meta’s VR headsets and Ray-Ban smart glasses, reported an annual loss of more than $16 billion in 2023.
The company reiterated its broader spending plans for 2024, saying it would shell out between $96 billion and $99 billion for the calendar year, up slightly from a low-end target of $94 billion to $99 billion. . He previously said much of that would go toward infrastructure costs in addition to…
