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£120bn wiped off Meta as AI doubts rise

Facebook CEO Mark Zuckerberg speaks to an avatar of himself in the "Metaverse"
Mark Zuckerberg's increasingly large bet on the metaverse and AI is making investors nervous - FACEBOOK

Shares in Meta plunged on Wednesday after the US tech giant revealed plans to increase spending on artificial intelligence (AI) technology.

About $150bn (£120bn) was wiped from the Facebook parent’s market value following the latest results, which covered the first three months of the year.

In a sign that investors may be cooling on Meta’s commitment to invest huge sums in AI, shares in the business dropped nearly 17pc during after-hours trading in New York.

The drop came despite Meta’s profits in the first quarter more than doubling compared to the same time last year, up 117pc after posting net income of $12.4bn.

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This followed Meta’s bid to slash costs in 2023 by cutting more than 21,000 jobs.

The Facebook and Instagram operator also reported revenues of $36.5bn, up 27pc on the same period in 2023, as digital advertising recovered.

However, the company said it planned to invest more than expected in AI technology and the so-called “metaverse”, increasing its estimated capital expenditure from between $30bn to $37bn, to as much as $40bn.

The company said it expected its overall costs to be as much as $99bn this year and said losses at its “reality labs”, which houses its speculative efforts to build metaverse hardware and apps, would continue to rise.

The fall in its share price came despite social media rival TikTok facing the prospect of a ban in the US.

Meta said: “We expect capital expenditures will continue to increase next year as we invest aggressively to support our ambitious AI research and product development efforts.”

In January, Mr Zuckerberg pledged to challenge rivals including Google Deepmind and OpenAI, the developer of ChatGPT.

To do so, Meta is currently planning to buy 350,000 powerful AI processors.

The latest setback to its share price comes after Facebook owner’s valuation has climbed more than 40pc so far this year, lifting Mr Zuckerberg’s net worth above that of rival Elon Musk.

Mr Zuckerberg said the latest results followed a “good quarter” for the business, which took “another step towards building the world’s leading AI”.