Meta stock falls 7% as Wall Street questions artificial intelligence spending
Meta closed out trading Friday down roughly 1%, extending a dismal market session following a 7% plunge on Thursday, Yahoo Finance reported. The drop occurred despite the social media giant reporting better-than-anticipated third-quarter revenue on Wednesday, as Wall Street renewed concerns over an artificial intelligence bubble. Investors pulled back across the board on semiconductor and other AI equities over questions about whether massive, ongoing capital expenditures in data centers will generate long-term financial returns. To fund its infrastructure growth, Meta raised the lower end of its capital expenditure estimates to a range between $135 billion and $145 billion, up from a previous floor of $130 billion. The company also carries $825 billion in total spending commitments tied to cloud capacity arrangements, energy service agreements, and consumer hardware products. Despite market skepticism regarding spending, Wall Street analysts remained largely bullish on Meta’s long-term outlook, driven by prospects for its Muse AI agent and models. CEO Mark Zuckerberg repeatedly highlighted Muse as a primary growth engine during the earnings call. Zuckerberg stated that Muse will prove highly profitable over multiple years, provided that compute efficiency in AI systems continues to improve. Meta posted an all-time high quarterly revenue of $64 billion, topping the $63.3 billion analysts anticipated. GAAP earnings per share hit $3.83 versus expectations of $3.56, but would have been $7.40 without legal charges stemming from the company’s teen mental health settlement. Ahead of the earnings report, a New Mexico judge ordered Meta to pay $25 billion in connection with the state’s consumer-harms case against the social media platform. Meta announced plans to issue new nonvoting Class C shares to all Class A stockholders, effectively creating a 2-for-1 stock split. The corporate maneuver ensures CEO Mark Zuckerberg maintains voting control of the company and stays in California should Proposition 40 pass on Election Day. Proposition 40 proposes a 5% tax on taxpayers holding assets exceeding $1 billion.
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