Meta Shares Plunge 10%, Reach Two-Week Low Amid Q1 Earnings and AI Spending Worries

Meta Shares Plummet 10.3% on AI Spending Worries

Meta Platforms' shares experienced a significant decline of 10.3% in Thursday's trade, 30 April, reaching a two-week low of $600 apiece. This marked the company's largest intraday decline in six months, as investors expressed concerns that the company's rapid spending on artificial intelligence (AI) may not generate returns quickly enough, overshadowing its otherwise better-than-expected March quarter performance.

Meta reported first-quarter sales of $56.3 billion, surpassing Wall Street estimates of $55.51 billion. The company also guided current-quarter revenue in the range of $58 billion to $61 billion, broadly in line with expectations. Net income for the quarter was $26.8 billion, according to the company's press release. However, the company raised its 2026 capital expenditure target by another $10 billion to around $145 billion, up from its earlier forecast of $115 billion to $135 billion.

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The company's increased spending on AI has raised concerns among investors, with Meta's Chief Executive Officer, Mark Zuckerberg, stating that the company will spend hundreds of billions of dollars on AI infrastructure by the end of the decade. The company has recently introduced several cost-cutting measures, including cutting roughly 8,000 jobs and leaving another 6,000 open roles unfilled. Additionally, Meta reported its first-ever quarterly decline in Daily Active People (DAP), a metric that tracks users across its social media platforms.

Meta has been investing heavily in AI, with multi-billion-dollar deals with Nvidia, Advanced Micro Devices, and Broadcom for chips and related hardware, as well as building several massive data centres to power its AI ambitions. The company's spending on AI is significantly outpacing revenue growth, intensifying investor concerns. The intensifying AI race is also making it increasingly difficult for investors to assess when such heavy spending will begin yielding meaningful payoffs.