Meta is reduced by 15% on weak vision and high AI and meta counter costs

Shares of META fell 15% in afternoon trade after a weak outlook for Q2 earnings and plans to “dramatically” increase spending in artificial intelligence this year – with the Metaverse division expected to remain loss-making.

The tech giant's chief financial officer, Susan Lee, said in its first-quarter results on April 24 that its revenue guidance for the second quarter would fall between $36.5 billion and $39 billion — below Wall Street's expectation of $38.3 billion.

Lee's expenses range from $96 billion to $99 billion – from $94 billion to $99 billion due to “higher infrastructure and legal costs.”

She also raised full-year 2024 capital spending to $40 billion from the previous $37 billion as she “invests heavily to support our ambitious AI research and product development.”

Meta posted Q1 revenues of $36.46 billion – a 27% year-over-year (YOY) jump, beating Wall Street analysts' Zacks estimate of $36.28 billion by 0.48%.

Earnings per share more than doubled YOY to $4.71, beating estimates of $4.32 per share.

Meta's opposite building, Reality Labs, lost $3.85 billion in Q1 — nearly $4 billion from the loss in Q1 2023 — and Meta expects those losses to widen year-over-year as it banks the division's product development.

CEO Mark Zuckerberg said on the earnings call that “Our Reality Labs will increasingly serve our AI efforts.”

Meta expected a “multi-year investment cycle” before “fully scaling” its AI business.

Related: UK watchdog worries about tech giants' control of AI market

“Building the leading AI will be a bigger undertaking than any other experience we've added to our apps, and it will probably take several years,” Zuckerberg said.

Meta shares fell 15.4% after-hours to $417.22 on April 24, closing the day up 0.5% at $493.50, according to Google Finance.

Meta, however, is still up 42.5% year-to-date, hitting an all-time high of $527.34 earlier this month on April 5.

April 18 Meta Llama 3 AI model posted on Meta AI Chatbot on Facebook, Instagram, WhatsApp and Facebook Messenger.

A Meta AI chatbot has reportedly posted strange communications to a Facebook group of New York moms telling them it has a baby.

But meta human reviewers said Llama 3 outperformed other models, including OpenAI's ChatGPT-3.5.

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