Meta’s Spending Plans Sent Stock Tumbling, But Seen Boosting Long-Term AI Leadership [Video]

Meta Platforms (META) shares tumbled over 10% Thursday, a day after the company said it expects higher expenses to invest in artificial intelligence (AI), but analysts said the near-term spending could boost Meta’s position in the long term.

The tech giant reported first-quarter earnings after the bell Wednesday, beating analyst estimates, but the company gave a weak outlook and increased the lower end of its projected full-year expenses, sending shares lower.

On Meta’s earnings call, CEO Mark Zuckerberg reported that 30% of the content users see on Facebook and 50% on Instagram is delivered by its AI recommendation engines. He said AI-powered recommendations improve engagement and increase ad efficiency.

Third Bridge analysts wrote that “the company’s revenue and market-share performance has been supported by its AI-enabled Advantage+ platform,” noting “the volume increases and pricing benefits associated with the platform.”

“However, some other potential ROI benefits of the company’s AI initiatives and spending seem …