Meta stocks fall after a warning of economic uncertainty.

Oct 26
Even though Meta Corp. intends to make significant investments in new ventures like virtual reality and artificial intelligence, the corporation also crushed investors' dreams for a sustained revival in the advertising industry, claiming it was due to the whims of an unstable economic climate.

In a conference call with investors, Chief Financial Officer Susan Lee stated, "We are very exposed to macroeconomic volatility." "The outlook for earnings in 2024 is uncertain."

In recent years, Meta has made an effort to persuade investors that it is appropriately striking a balance between maintaining the growth of its core digital advertising business and making significant investments in cutting-edge technologies like AI and VR.
Investors showed their mistrust of the company's approach last year when it reported its first revenue decline, driving the stock to an all-time low. The business reduced expenses, let go of workers, and made an effort to counteract falling sales.

Initial findings from Meta on Wednesday indicated that the company had recovered from issues with its advertising division. In contrast to the average forecast of $33.5 billion by experts, the corporation posted third-quarter sales of $34.2 billion.

However, a pricey expenditure plan for 2024, primarily on artificial intelligence infrastructure and human resources, was included with Meta's warning about probable macroeconomic uncertainties that could impact earnings. Additionally, the business keeps funding Reality Labs, its financially unsuccessful virtual reality branch.

Lee stated, "We acknowledge that we have very ambitious investments coming up, including new, equally ambitious investments that we recently added to our artificial intelligence roadmap, as well as long-term investments in our Reality Lab."

She continued, "And we realize that to invest in all of these things, we must first earn the opportunity to deliver consolidated operating profit growth over time."

The company slashed thousands of jobs and several projects earlier this year to concentrate on leveraging artificial intelligence to improve advertising and algorithms. As a result, there has been less discussion of the metaverse—the virtual reality environment that CEO Mark Zuckerberg renamed the company—especially in the presence of skeptic investors.

Meta takes a different tack in the race against AI compared to its rivals at large IT businesses. Most of the time, it provides huge language models or research for free to developers; the company thinks this open approach would speed up the advancement of the technology. This is the technology underpinning AI chatbots.

The business debuted its first generative AI services for customers at its developer conference in September. These products included a variety of chatbots and picture editing tools for social media sites like Facebook and Instagram.

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