- Meta's first-quarter earnings report revealed that capital spending was down by at least $5 billion.
- The report said costs are expected to increase as the company invests “aggressively” in AI.
- Mehta also cited increased infrastructure and litigation costs as factors for the increase.
Meta's first quarter earnings report revealed that the company's AI plans are costing more than expected.
The tech giant is raising its capital expenditure estimates and expects the increases to continue as it “aggressively” invests in “AI research and product development efforts.”
Costs are expected to reach $35 billion to $40 billion, about $5 billion more than originally estimated. Initial projections were between $30 billion and $37 billion.
Meta's minimum estimate for full-year 2024 expenses is also expected to be $2 billion higher than expected.
The report said, “We expect total expenses for the full year of 2024 to be in the range of $96 billion to $99 billion, compared to previous estimates of $94 billion to $99 billion due to increased infrastructure and legal costs.'' It will be updated from.''
This increase is not only due to AI. We also incur product development and litigation costs.
Meta currently faces ongoing legal issues, including an antitrust lawsuit and lawsuits from 33 states accusing the tech giant of harming children's mental health.
The company too The company expects Reality Labs' operating loss to increase significantly due to “continued product development efforts” and investments to expand its ecosystem, according to the report.
Reality Labs is a division of Meta focused on human-computer products through virtual reality headsets and augmented reality glasses.
Max Willens, senior analyst at market research firm Emarketer, a sister company of Business Insider, said it's not surprising that Meta changed its guidance.
“Companies that are investing in this space, particularly to the extent that Meta is investing, may struggle with costs in the short term,” Willens said.
