Shares in Meta and Microsoft plunged Thursday after the tech giants announced plans to ramp up AI spending – and investors worried that the cash might not yield major payouts.
Fears that artificial intelligence investments have been overhyped sent the tech-heavy Nasdaq down 1.3% as of about 3:30 p.m. ET Thursday.
Meta’s stock cratered about 11.5% over mounting concerns around the social media giant’s plans to hike spending – overshadowing a strong earnings report from the day before.
“It’s pretty early, but I think we’re seeing the returns in the core business,” CEO Mark Zuckerberg said during Wednesday’s earnings call.
“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.”
The company announced plans to lift its 2025 capital expenditures to between $70 billion and $72 billion – even higher than its previous range of $66 billion to $72 billion.
Zuckerberg’s firm – which owns Facebook, Instagram and WhatsApp – has already spent big on the futuristic tech.
Earlier this year, it made headlines by taking a nearly $15 billion stake in Silicon Valley startup Scale AI – which brought over its 28-year-old CEO, Alexandr Wang, to run Meta’s Superintelligence Labs.
Meta isn’t the only top tech company to invest heavily in artificial intelligence and related infrastructure – including costly, power-hungry data centers that require lots of upfront capital.
Google owner Alphabet also hiked its spending forecast to $91 billion to $93 billion on Wednesday.
Shares in Microsoft fell about 3.4% Thursday after the company said it plans to continue its heightened AI spending – even after taking a massive hit to earnings.
In its earnings report Wednesday, Microsoft said it had a $3.1 billion decrease in net income in the first quarter due to its huge investment in OpenAI, the firm behind ChatGPT.
Microsoft CEO Satya Nadella insisted his company’s ties with OpenAI mark “one of the most successful partnerships and investments our industry has ever seen.”
“We continued to benefit mutually from each other’s growth across multiple dimensions,” he said during Wednesday’s earnings call.
Microsoft first invested in OpenAI in 2019, pledging to invest $13 billion in the company since then. It has already funded $11.6 billion as of the end of September, according to an SEC filing.
Microsoft holds an investment in OpenAI’s public benefit corporation that’s worth about $135 billion, or about 27% of the company.
Meanwhile, Meta has received about $125 billion worth of orders for a potential bond sale – breaking the record for the most ever offered, a source familiar with the matter told The Post.
The social media giant is looking to raise at least $25 billion from the sale, Bloomberg earlier reported.
Citigroup and Morgan Stanley are reportedly involved in the deal.
Morgan Stanley declined to comment. Citigroup and Meta did not immediately respond to The Post’s requests for comment.
