The tech giant’s AI efforts are reminiscent of the spending on the metaverse that sent the company’s shares tumbling, the report said.
Meta’s earnings from last week exceeded expectations, but investors were more interested in capital expenditures, which the company said could reach $72 billion this year and be “notably larger” in 2026, according to the report.
CEO Mark Zuckerberg tried to ease concerns that the company might be spending too much on its Superintelligence Labs, saying on an earnings call that it was “the right strategy to aggressively front-load building capacity,” per the report.
Now, Meta’s stock is suffering its worst four-day run in three years, plunging nearly 17% and erasing $307 billion in market value, the report said. The selloff in 2022 was also caused by investor doubts about Meta’s spending plans, ultimately sending shares down 77% from their peak in 2021.
“This feels like a return to Meta’s old days of overspending on things that are frivolous or which don’t have appropriate return demands tied to them,” said Tiffany Wade, senior portfolio manager at Columbia Threadneedle Investments, per the report. “Investors are losing patience.”
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PYMNTS wrote Friday (Oct. 31) about the parallels between Meta’s metaverse efforts and today’s AI spending.
“Building infrastructure without a clear definition of what success looks like leaves Meta exposed to the same pattern that has potentially derailed its metaverse,” the report said. “Reality Labs’ operating losses still exceed $4 billion a quarter, according to Reuters. Its total metaverse burn has now pushed past $60 billion since 2020, underscoring the risk of chasing visions that lack commercial validation.”
The new AI vision could face the same fate. Unlike Microsoft, Google or Amazon, which have paired AI investments with clear revenue pathways, Meta continues to build for in-house use.
“Meta … uses its AI for engagement, recommendation engines, ad ranking, and tools like Meta AI and Reels,” PYMNTS wrote. “Those may improve user metrics, but it’s not clear how they will contribute to the bottom line.”
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