Tech Stock Plunge: Meta’s AI Forecast Sends Shockwaves
Investors were rattled as tech stocks took a plunge in premarket trading following Meta’s lackluster AI forecasts, signaling a cautious approach to artificial intelligence. Wall Street’s optimism towards AI may not align with Silicon Valley’s fervent enthusiasm.
Key Facts
Meta saw a more than 15% drop in shares during premarket trading after revealing expectations of slower growth and increased AI expenditure. The company’s reliance on advertising revenue raises uncertainty about AI’s profitability.
This downturn triggered a broader tech stock sell-off, with major players like Google, Microsoft, and Amazon experiencing 2% to 3% declines.
Social media companies Snap and Pinterest witnessed 4% to 5% decreases, while Reddit’s slip was milder at around 1%.
Nvidia, a key AI hardware provider, initially dropped 2% but rebounded before market opening.
Apple and Tesla were relatively unaffected, while Palantir and Dell faced 2% to 3% declines.
More tech giants like Microsoft, Alphabet, and Intel are set to report earnings, adding to the market’s anticipation.
News Peg
Meta, along with other tech companies, has embraced generative AI, fueling a technology race among industry leaders. The launch of OpenAI’s ChatGPT in 2022 marked a turning point for AI, sparking a wave of innovation and competition among tech giants to develop advanced AI solutions like Meta AI, driven by the potent Llama 3 model.
Crucial Quote
Meta CEO Mark Zuckerberg highlighted the company’s history of product development and scaling, expressing confidence in Meta AI’s potential for massive growth despite the necessary investment and time required for profitability.
Tangent
IBM reported lackluster sales figures, causing an almost 9% drop in premarket trading.
Forbes Valuation
Mark Zuckerberg’s estimated net worth of $173.1 billion, predominantly from his stake in Meta’s predecessor, Facebook, places him among the world’s wealthiest individuals. He, along with his wife, has pledged to donate a significant portion of their wealth.
Further Reading
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