Meta Stock Tanks In Jittery Market On Massive AI Investment, Mixed Q2

Meta shares plunged more than 8% in the after market as it said it plans to invest between $130 billion and $145 billion on AI this year. The parent of Facebook, Instagram and WhatsApp also missed Wall Street’s Q2 earnings per share forecast and anticipated softer than expected revenue in the current third quarter. Revenue in the June quarter, however, jumped 28% from the year before to $60.8 billion. That beat forecasts as advanced AI boosts Meta’s key digital advertising business that accounts for almost all of its sales. Ad impressions rose 14% across its family of apps and average price per ad increased 12%. But the big question investors have about Meta and others in the space is whether the onging massive spending on data centers and chips to build out AI capacity justifies the gains. Meta in particular is coming from behind trying to compete with OpenAI, Anthropic and Google. On Tuesday, it announced a venture with BlackRock to build a $14 billion data center in El Paso, Texas. Watch on Deadline “AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities,” said CEO Mark Zuckerberg. “The results are already showing, and I’m optimistic about the potential ahead. He’ll host a call at 4:30 ET to talk about the numbers. The company had 3.6 million Daily Active People (DAP), its preferred user metric, for the three months ended in June. The earnings hit shortly after a press conference by new Federal Reserve chief Kevin Warsh that spooked markets. The Fed left interest rates unchanged at its July policy meeting but Warsh said he wouldn’t hesitate to raise them if inflation continued to run ahead of the central bank’s 2% target. That could hit tech companies hard as they invest aggressively. The Dow Jones Industrial Average fell over 1,000 points in its worst trading day of the year. More to come