Meta Platforms, the parent of Facebook and Instagram, said on Wednesday it expects overall expenses this year to be higher than it previously forecast as it spends heavily to roll out new AI products and bolsters the infrastructure to support them.
Shares of the company fell 10 per cent after the close in New York.
The company expects 2024 capital expenditure in the range of $35 billion (€32.7 billion) to $40 billion (€37.4 billion), up from its earlier forecast of $30 billion (€28 billion) to $37 billion ($34.6 billion).
It also raised its total expenses forecast to $96 billion (€89.7 billion) to $99 billion (€92.5 billion), up from $94 billion (€87.9 billion) to $99 billion (€92.5 billion).
File being prepared for DPP over insider trading
Christmas tech for kids: great gift ideas with safety features for parental peace of mind
MenoPal app offers proactive support to women going through menopause
Ezviz RE4 Plus review: Efficient budget robot cleaner but can suffer from wanderlust under the wrong conditions
Meta has been updating its ad-buying products with AI tools and short video formats to boost revenue growth, while also introducing AI features like a chat assistant to drive engagement on its social media properties.
Revenue rose 27 per cent to $36.46 billion (€34 billion) in the first quarter, beating expectations of $36.16 billion (€33.8 billion) according to LSEG data.
It forecast current-quarter revenue in the range of $36.5 billion (€34.1 billion) to $39 billion (€36.5 billion), compared with expectations of $38.29 billion (€35.8 billion).
Meanwhile, IBM will buy HashiCorp in a deal valued at $6.4 billion (€6 billion), expanding its cloud-based software products to tap into an AI-powered boom in demand.
Software has been a bright spot for IBM as its consulting business grapples with more cautious spending by enterprises navigating higher interest rates.
IBM, which separately reported first-quarter adjusted profit above Wall Street estimates, has doubled down on its cloud business as it becomes increasingly necessary to store and process the vast amounts of data employed in artificial intelligence programs.
The Big Blue’s “AI book of business” crossed $1 billion (€934,700,000) in the first quarter, growing sequentially. The book comprises actual sales and bookings from various offerings.
The acquisition will be funded by cash on hand and will add to adjusted core profit within the first full year of closing, expected by the end of 2024.
California-based HashiCorp allows customers to establish and manage their infrastructures on the cloud.
“The deal provides a cloud infrastructure automation growth engine for IBM,” Stephen Elliot, a vice-president at market research firm International Data Corp, said on Tuesday, following reports of the talks.
The deal is a great complement to IBM’s Red Hat business, Elliot added.
Software revenue grew 5.5 per cent in the first quarter while the consulting segment was flat. Total revenue of $14.46 billion (€13.5 billion) fell just short of LSEG estimates of $14.55 billion (€13.6 billion).
“You’re seeing clients in this uncertain macroeconomic environment. You’re seeing clients that are tightening discretionary spending,” CFO Jim Kavanaugh told Reuters.
Accenture had cut its fiscal-year 2024 revenue forecast in March as clients curbed spending on its consulting services.
The company reported adjusted earnings of $1.68 per share for the quarter ended March, compared to analysts’ average estimate of $1.60. – Reuters
(c) Copyright Thomson Reuters 2024
