• Tuesday, May 28, 2024
businessday logo

BusinessDay

Meta loses $200bn on AI revenue fears

Beyond Nollywood: How Meta can unleash a generation of Nigerian creators

Meta, the parent company of Facebook, Instagram, and WhatsApp has lost about $200 billion in value following Mark Zuckerberg’s announcement that it may take several years for its work on AI to scale up and start making money.

Hours before this, the company’s reported results showed higher costs and smaller-than-expected revenues due to investments in Artificial Intelligence (AI). During the announcement of the results, Meta’s chief executive officer, Zuckerberg made the revelation that it could take several years for AI to start making money.

Read also: Explainer: What Meta AI’s rollout means for WhatsApp, Instagram users

This announcement led to fears among investors and shareholders that the company’s investments in AI may not pay off, and that its fortunes may become weaker in the future. This fear set off a sell-off that reduced Meta’s value by over $190 billion.

This announcement also led to a fall in the share price of other social media platforms including Snapchat which fell by 4.8 percent, and Alphabet, Amazon, and Microsoft were down by between 1.5 percent and 2.7 percent.

While commenting on the results, Zuckerberg said, “There are several ways to build a massive business here, including scaling business messaging, introducing ads or paid content into AI interactions, and enabling people to pay to use bigger AI models and access more compute.

“And on top of those, AI is already helping us improve app engagement, which naturally leads to seeing more ads and improving ads directly to deliver more value.”