Meta (META) stock closed Thursday’s session down 7%, despite reporting better-than-expected third-quarter earnings results on Wednesday, as fears of an AI bubble resurfaced on Wall Street.
Investors have broadly pulled out of semiconductor and other AI stocks, questioning whether massive investments in AI data centers will pay off in the long term.
Meta raised the lower end of its capital spending estimates to $135 billion to $145 billion, up from $130 billion to $145 billion. The company also has $825 billion in miscellaneous spending related to cloud capacity agreements, energy services agreements and consumer hardware products.
648.85 -48.67 (-6.98%)
Closing: October 22 at 4:00:01 p.m. EDT
644.00 -4.85 (-0.75%)
Despite Wall Street’s reaction to Meta’s earnings, analysts were largely optimistic about the company’s prospects, due to its prospects for its agent and Muse AI models.
CEO Mark Zuckerberg repeatedly highlighted Muse as a source of growth potential during the company’s earnings call, saying that “Muse will be very profitable over several years” as long as the computational efficiency of AI systems continues to improve.
Learn more: Meta’s Muse says it can manage your money. Should we leave it?
Meta reported a record $64 billion in revenue during the quarter, well above the $63.3 billion analysts expected. GAAP earnings per share came in at $3.83 versus an expected $3.56, but would have been $7.40 without the lawsuits related to the company’s adolescent mental health settlement.
The company also announced it would issue new non-voting Class C shares to all Class A shareholders, creating a 2-for-1 stock split. The move is intended to ensure that Zuckerberg stays in California and retains voting control of the company if the state’s Proposition 40 passes on Election Day.
Proposition 40 calls for a 5% tax on taxpayers with assets exceeding $1 billion.
Learn more: What you need to know about the billionaires tax on the California ballot
Before Meta’s earnings report was released, a New Mexico judge ordered the company to pay $25 billion in the consumer harm lawsuit against the social media giant.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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