Meta Platforms, Inc. META CEO Mark Zuckerberg’s announcement related to “scaling capex and energy expenses for AI” during the company’s first-quarter financial results, allegedly led to a 17% stock plunge. Gene Munster believes the market’s reaction is an overreaction.
What Happened: During his opening statement on Wednesday, Zuckerberg revealed the company’s plans to ramp up AI investment by scaling capital expenditure and energy expenses.
He said, “We’re scaling CapEx and energy expenses for AI, we’ll continue focusing on operating the rest of our company efficiently. But realistically, even with shifting many of our existing resources to focus on AI, we’ll still grow our investment envelope meaningfully before we make much revenue from some of these new products.”
This announcement caused the stock to drop an additional 5%, bringing the total decline to 17%, according to Munster, the co-founder and managing partner of Deepwater Asset Management.
“He wants to get investors on the same page, they’re entering a multi-year investment cycle,” Munster said, adding, “My take, the stock action is an overreaction,”
Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox.
Why It Matters: Meta’s first-quarter financial results were strong. The company reported a revenue of $36.45 billion, a 27% increase year-over-year, according to data from Benzinga Pro. This figure surpassed the Street’s consensus estimate of $36.16 billion.
Last quarter, Meta surprised investors with better-than-expected results, introducing a quarterly dividend, and unveiling a $50 billion expansion to its buyback initiative.
On Wednesday, the tech giant said that last year it prioritized increasing operational discipline, achieving robust execution, and improving advertising performance. Looking ahead to 2024, the company intends to further strengthen its efforts in these domains while also advancing its long-term ambitions in AI and Reality Labs.
META Price Action: Meta shares declined 15.1% after hours to $418.85 after closing 0.52% lower at $493.5 in the regular session, according to data from Benzinga Pro.
Photo courtesy: Shutterstock
Check out more of Benzinga's Consumer Tech coverage by following this link.
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
