Mark Zuckerberg, CEO of Meta Platforms, arrives at the Meta Connect event on September 25, 2024 in Menlo Park, California.
David Paul Morris | Bloomberg | Getty Images
meta is building massive data centers and computing infrastructure for its artificial intelligence projects so quickly that even CEO Mark Zuckerberg is a little surprised.
On a conference call with analysts Wednesday after Meta reported its third-quarter results, Zuckerberg told investors that Meta’s rising costs this year will mean employees are running data centers, servers and AI chips. I explained how it is related to the speed of movement.
“Coming into this year, we had the scope of what we thought we could potentially do, and we were able to do more than what we expected and expected at the beginning of the year. “Zuckerberg said.
It also means investors have to be prepared for higher expenses. Meta raised the lower end of its 2024 capital investment outlook from $37 billion to $38 billion. The cap remains at $40 billion.
“I’m actually very happy that the team is working so well,” Zuckerberg said. “This execution has given me some optimism that we can continue to build this at a good pace.”
Mehta added that spending will increase significantly in 2025, including the purchase of billions of dollars worth of Nvidia graphics processing units.
Meta shares fell in after-hours trading on Wednesday, even though the company beat on earnings and sales. Lower-than-expected user growth was among the concerns, along with rising costs.
Barclays analyst Ross Sandler said on the earnings call that Meta is in a position to achieve its generative AI goals, given possible barriers such as energy requirements and the time needed to develop its own custom AI-specific chips. I asked Zuckerberg how quickly he could build the massive computing infrastructure needed.
Zuckerberg responded by praising Meta’s infrastructure team for doing a “very good job” in building computing power for various AI projects, including the Llama family of large-scale language models.
Wall Street believes that big technology companies like Meta alphabet You’re spending too much on infrastructure without seeing immediate benefits. It’s a theme Zuckerberg acknowledged in an interview with Bloomberg in July, telling Emily Chan that companies may be “overbuilding right now.” But he said the risks of underinvestment were too great.
“The formula for building infrastructure may not be what investors want to hear in the short term. It’s that we’re growing it,” Zuckerberg said Wednesday. “But I think the opportunity here is really big. We’re going to continue to invest heavily in this, and we’re doing a great job ramping up a lot of manufacturing capacity so that we can do that.” We’re proud of our team for delivering world-class models and world-class products. ”
This isn’t the only place investors have to put up with big expenses.
Meta’s Reality Labs division, home to Metaverse technology, posted an operating loss of $4.4 billion in the third quarter. The company said it expects “operating losses in 2024 to be significantly higher year-over-year due to our continued product development efforts and investments to further expand our ecosystem.”
Attention: The drop in Meta stock after earnings results is a “wrong reaction”.
