{"id":644802,"date":"2026-05-01T07:58:00","date_gmt":"2026-05-01T05:58:00","guid":{"rendered":"https:\/\/mybroadband.co.za\/news\/?p=644802"},"modified":"2026-05-01T09:03:31","modified_gmt":"2026-05-01T07:03:31","slug":"trouble-for-whatsapp-and-facebook-owner","status":"publish","type":"post","link":"https:\/\/mybroadband.co.za\/news\/business\/644802-trouble-for-whatsapp-and-facebook-owner.html","title":{"rendered":"Trouble for WhatsApp and Facebook owner"},"content":{"rendered":"\n

Meta Platforms shares plunged the most in six months after the company raised its spending outlook for the year.<\/p>\n\n\n\n

The move reignited fears that the historic levels of investment that chief executive officer Mark Zuckerberg is making to catch up in the artificial intelligence race won\u2019t pay off.<\/p>\n\n\n\n

The social media giant projected full-year capital expenditures of $125 billion to $145 billion, exceeding analysts\u2019 estimates and marking a roughly 7.4% increase from the company\u2019s previous projections in January. <\/p>\n\n\n\n

Meta said the increase is partly driven by the conviction that its AI strategy is working, but the company is also dealing with \u201chigher component pricing\u201d and additional data centre costs, chief financial officer Susan Li said Wednesday on a call with investors.<\/p>\n\n\n\n

Zuckerberg has said that his company will spend hundreds of billions of dollars on AI infrastructure by the end of the decade, and that was before a memory chip shortage triggered a surge in prices. <\/p>\n\n\n\n

Meta has announced billion-dollar deals with Nvidia, Advanced Micro Devices, and Broadcom for chips and other hardware just since the beginning of the year, and is building several massive data centres to power its efforts.\u00a0<\/p>\n\n\n\n

On Thursday, Meta is kicking off<\/a> a bond sale of between $20 billion and $25 billion in debt, according to people with knowledge of the matter. Play Video<\/p>\n\n\n\n

Zuckerberg said he has \u201cconfidence\u201d in the decision to further boost AI spending, but that confidence wasn\u2019t reciprocated by Wall Street. <\/p>\n\n\n\n

Investors balked when the CEO failed to provide details about how Meta plans to make a return on its investments, sending shares down 8.6% to $611.91 at the close on Thursday in New York, the worst single-day performance since 30 October.<\/p>\n\n\n\n

The higher spending \u201cincreases the stakes\u201d for Meta given it\u2019s using its own AI system, \u201cwhich still trails frontier lab peers,\u201d wrote Bloomberg Intelligence analyst Mandeep Singh. <\/p>\n\n\n\n

\u201cSo far, Meta\u2019s stand-alone app hasn\u2019t had the amount of engagement vs. other frontier labs.\u201d <\/p>\n\n\n\n

Amazon and Google also increasing AI spend<\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n

Meta wasn\u2019t the only major technology company to raise spending this week. Amazon reported quarterly capital expenditures that were\u00a0higher<\/a>\u00a0than analysts anticipated for expanding data cen<\/span>tre capacity. <\/p>\n\n\n\n

Alphabet\u2019s Google raised its full-year capital expenditure projections to as much as $190 billion. <\/p>\n\n\n\n

But Google still managed to spur a rally after beating on quarterly revenue and profit, signaling confidence in the company\u2019s AI bets.<\/p>\n\n\n\n

Meta reported $56.3 billion in first-quarter sales, beating Wall Street\u2019s estimate of $55.51 billion. It projected sales of $58 billion to $61 billion for the current quarter, roughly in line with expectations.\u00a0<\/p>\n\n\n\n

Daily active people across all of Meta\u2019s social media platforms slightly declined in the first quarter to 3.56 billion. <\/p>\n\n\n\n

The company cited Internet disruptions in Iran and Russia\u2019s restrictions on WhatsApp access. That marked the first drop since the company began using that metric. <\/p>\n\n\n\n

Li, the CFO, said Meta would have seen positive user growth absent the geopolitical conflicts.<\/p>\n\n\n\n

Meta also reported first-quarter net income of $26.8 billion, which included a one-time, non-cash income tax benefit of $8 billion due to the implementation of the US tax policy signed into law in July. <\/p>\n\n\n\n

Analysts had estimated non-adjusted net income of $17.2 billion, without anticipating the benefit.\u00a0<\/p>\n\n\n\n

8,000 job cuts<\/h2>\n\n\n\n
\"\"
Mark Zuckerberg, Meta Platforms CEO<\/figcaption><\/figure>\n\n\n\n

Meta recently imposed a number of cost-cutting measures \u2014 a process Zuckerberg described Wednesday as \u201cincreasing the efficiency of our investments.\u201d <\/p>\n\n\n\n

Last week, the company alerted staff in\u00a0an internal memo<\/a>\u00a0that it would be cutting roughly 8,000 jobs and wouldn\u2019t be filling 6,000 open roles. <\/p>\n\n\n\n

Meta already carried out other, more limited cuts earlier this year that hit its Reality Labs hardware division, among other teams.<\/p>\n\n\n\n

Evercore ISI estimated the May layoffs will save the company about $3 billion annually, and that companies will rely more on AI agents to help handle tasks that once required human employees. <\/p>\n\n\n\n

\u201cWe believe the industry is just beginning to realise the growth opportunities coming out of agentic deployments \u2013 and the stepped-up level of investments required to support them,\u201d Evercore analyst Mark Mahaney said in a note to investors.\u00a0<\/p>\n\n\n\n

Meta executives spent much of Wednesday\u2019s earnings call discussing AI agents, including the fact that many employees are using them to help with product development and other tasks. <\/p>\n\n\n\n

Still, $3 billion is a small sliver of Meta\u2019s total AI investments.<\/p>\n\n\n\n

Earlier in April, Meta debuted its latest artificial intelligence model, Muse Spark \u2014 the first released since Zuckerberg embarked on a multibillion-dollar overhaul of the company\u2019s AI organisation last year.\u00a0<\/p>\n\n\n\n

\u201cWe are already training even more advanced models,\u201d Zuckerberg said on the call, adding that he doesn\u2019t have \u201ca very precise plan\u201d for how each AI product will be scaled out.<\/p>\n\n\n\n

\u201cI think we have a sense of the shape of where things need to be,\u201d he said, acknowledging that his answers to analysts\u2019 questions may be \u201cunfulfilling.\u201d <\/p>\n\n\n\n

Zuckerberg said he\u2019d provide more detail in subsequent quarters, but has historically focused on building products to be used by hundreds of millions or even a billion users before turning his attention toward using them to drive revenue.\u00a0<\/p>\n\n\n\n

Meta\u2019s mounting child safety litigation poses another potential obstacle. <\/p>\n\n\n\n

In a\u00a0landmark ruling in March, a jury found Meta liable for a 20-year-old woman\u2019s long-standing mental health struggles, which she said were caused by her addiction to social media. <\/p>\n\n\n\n

While Meta must pay millions to the plaintiff, the ruling could expose the company to billions of dollars in risk from additional lawsuits. <\/p>\n\n\n\n

Two other bellwether cases are scheduled to go to trial in California state court later this year.\u00a0<\/p>\n\n\n\n

Meta acknowledged on Wednesday that it continues to \u201csee scrutiny on youth-related issues and have additional trials scheduled for this year in the US, which may ultimately result in a material loss.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Meta Platforms’ shares plunged after it raised its spending outlook for the year, with concerns that its investments are not helping it catch up in the AI race. <\/p>\n","protected":false},"author":341034,"featured_media":602958,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[92837,19],"tags":[35793,161,10424,1767,73842,104955,2594],"class_list":["post-644802","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-business","tag-artificial-intelligence-ai","tag-facebook","tag-instagram","tag-mark-zuckerberg","tag-meta-platforms","tag-susan-li","tag-whatsapp"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/644802"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=644802"}],"version-history":[{"count":2,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/644802\/revisions"}],"predecessor-version":[{"id":644806,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/644802\/revisions\/644806"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/602958"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=644802"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=644802"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=644802"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}