Meta Stock Declines Over 9% Following Earnings Release, Google Shares Surge
Tech Giants' Earnings Show Starkly Different Investor Reactions
On Thursday, Wall Street witnessed significant fluctuations in the shares of tech giants Meta and Alphabet, the parent company of Google, following the release of their quarterly earnings reports. Meta's shares plummeted nearly 10 percent at the opening, while Alphabet surged more than six percent.
The contrasting investor reactions can be attributed to the vastly different approaches taken by the two companies in their costly bets on artificial intelligence (AI). Amazon and Microsoft, which also reported earnings on Wednesday, saw their shares fall over AI concerns, by two percent and 3.7 percent respectively.
| Company | Share Change |
|---|---|
| Amazon | -2% |
| Microsoft | -3.7% |
| Meta | -10% |
| Alphabet | +6% |
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The earnings reports of the tech giants came as AI titans pump billions of dollars into cloud computing and artificial intelligence, vying to lead in a technology that they insist will transform all aspects of life. Investors have broadly lauded Google's success in pivoting to AI and its solid revenue across major divisions.
Alphabet's quarterly earnings showed a profit of $62.6 billion on revenue just shy of $110 billion, easily eclipsing the same period a year earlier and beating market expectations. In contrast, Meta's results sent tremors through the market by announcing that expenses notched up to $33.4 billion as it chases "superintelligence," including a hiring spree for top AI talent.
Meta's AI investments are not directly tied to a revenue stream, unlike Amazon, Microsoft, and Google, which sell AI capabilities to cloud clients. The company has moved to rein in costs to help fund its AI ambitions, announcing last week that it would cut roughly 8,000 jobs and leave 6,000 open roles unfilled.
As trading progressed, the Dow Jones Industrial Average was up 0.8 percent at around 49,241. The broad-based S&P 500 gained 0.2 percent to about 7,151, while the tech-rich Nasdaq Composite Index was flat at around 24,665.
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Investor Takeaway
Investors should be cautious of AI-related stocks following Meta's decline and Google's surge.
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