Mark Zuckerberg’s AI Spending Spree Raises Investor Concerns
During Meta’s latest earnings call on Wednesday, the CEO revealed that the company now plans to spend between $70 billion and $72 billion on AI this year, slightly higher than its previous forecast of $66 billion to $72 billion, as per a report. The massive outlay is part of Zuckerberg’s long-term vision to make Meta a leader in AI, but not everyone is convinced the spending spree will pay off, as per a Futurism report.
Meta Stock Falls Despite Revenue Beat
Investors reacted sharply to the announcement. Meta’s stock plunged more than 11% on Thursday and also dropped more than 2% on Friday, even though the company’s revenue topped Wall Street’s expectations.
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Investor Skepticism Over Meta’s ROI
Brian Mulberry, portfolio manager at Zacks Investment Management, told The Wall Street Journal, “The total dollar spend is just kind of what hangs us up a little bit,” adding, “They have to start doing a better job of showing us when that comes back to the balance sheet.”
Mulberry also questioned Meta’s ability to turn its ballooning expenditures into profit, saying, “The return on invested capital is definitely a huge metric for us and the fact that they are being a little bit cagey and not quite upfront with what exactly is going on doesn’t help soothe those fears,” as quoted in the report.ALSO READ: What is Hindenburg Omen that was triggered yesterday? If you are an investor, do take note
AI Race Fuels Market Concerns
Meta’s spending surge comes amid an AI race among tech giants. Competitors like Alphabet and Microsoft are also ramping up their investments, fueling fears of an AI bubble that could destabilize the broader economy if it bursts.
Even Microsoft, which reported stronger-than-expected quarterly results, saw its stock fall nearly 3% this week as investors balked at its plans for higher spending, as per the report.
Mark Zuckerberg Emphasizes Urgency in AI Investments
For Zuckerberg, though, the gamble appears intentional. He told investors that it’s crucial for Meta to move fast while AI momentum is building, saying, “It’s pretty early, but I think we’re seeing the returns in the core business. That’s giving us a lot of confidence that we should be investing a lot more, and we want to make sure that we’re not underinvesting,” as quoted by Futurism.
In pursuit of that vision, Meta has gone on a massive AI hiring spree, investing over $14 billion in AI startup Scale AI and even poaching its CEO, Alexandr Wang, to head Meta’s new “Superintelligence Labs.” The company has reportedly been offering massive pay packages, some worth tens of millions to more than $1 billion.
Meta AI Layoffs
However, cracks have started to show as the company revealed plans to cut hundreds of roles from its AI unit earlier this month.
FAQs
How much is Meta spending on AI?
Meta plans to spend between $70 billion and $72 billion on AI in 2025, as per the Futurism report.
Why are investors worried about Meta’s AI spending?
Investors are concerned that the huge costs could outweigh profits, as per the Futurism report.
The post Meta AI Mark Zuckerberg spending 2025: Billion-dollar salaries, massive investment – is Mark Zuckerberg’s out-of-control AI spending rattling investors? appeared first on Veritas News.
