News
The parent company of Facebook, Instagram and Whatsapp is increasing spending to become a global AI leader
This week, Meta released its Q1 earnings report, in which the company announced a heavy increase on AI spending, and confirmed its plan to turn the group into “the leading AI company in the world”.
Revenue for the quarter totalled $36.5 billion, a year-on-year increase of 27% and just above analyst expectations ($36.2 billion). Total expenses reached $22.6 billion, a 6% increase.
“It’s been a good start to the year — both in terms of product momentum and business performance,” said CEO mark Zuckerberg in the earnings call.
Two key factors of the report appear to have worried investors, causing shares to plunge 15% in after-hours trading.
Firstly, a weaker-than-expected Q2 revenue. Meta’s second-quarter revenue guidance fell short of analysts’ forecasts. The company expects overall sales to be between $36.5 billion and $39 billion, with the mid-point missing the estimated $38.2 billion. This cautious outlook has raised concerns about Meta’s ability to sustain its impressive performance so far.
Secondly, Meta have announced an increase in AI spending, including AI training and high-computing chips in its data centres. Its capital expenditures for full-year 2024 are now projected to range from $35 billion to $40 billion, up from the previous estimate of $30 billion to $37 billion.
CEO Mark Zuckerberg said this was so Meta can “continue to accelerate our infrastructure investments to support our AI roadmap”. While not providing expenditure guidance beyond this year, Zuckerberg noted that it is expected to increase as the company is set to “invest aggressively” in AI R&D to compete with rivals such as OpenAI and Microsoft.
Last week, Meta released the latest version of Meta AI, which is powered by its latest model, Llama 3. In the earnings call, Zuckerberg confirmed that the “goal with Meta AI is to build the world’s leading AI service both in quality and usage.” The company believes that Meta AI is the most intelligent free AI assistant.
Keep up to date with the latest international telecoms news by subscribing to the Total Telecom daily newsletter
Also in the news:
South Korea to invest $7 billion in AI semiconductors
Swisscom expands 5G partnership with Ericsson
Daisy Group set to acquire 4Com for £215m
