Source: Fortune
Summary
Meta’s shares fell 10% after the company missed earnings due to ballooning costs. Revenue was up 28% from a year earlier, but operating income fell 8% and net income dropped 14%. The company spent almost every dollar of cash on AI infrastructure, with capital expenditure reaching $31.1 billion in the quarter. Meta’s financial model is being upended by the need to invest in data centers and AI infrastructure, with the company now expecting full-year capital expenditures of $130 to $145 billion.
Our Reading
The numbers tell one story.
Meta’s core business grew revenue, but made less money doing it. The company spent almost every dollar of cash on AI infrastructure, with capital expenditure reaching $31.1 billion in the quarter. This new Meta must build multi-billion-dollar data centers at a non-stop pace. The company’s financial model is being upended by the need to invest in data centers and AI infrastructure. Mark Zuckerberg framed the opportunity to generate additional revenue by renting its computing infrastructure to other companies as a side quest, and said that he believed the real value is in offering its own AI services on top of its infrastructure.
My personal bet is that the people who invest in this are going to be rewarded and feel very good over time.
Author: Evan Null
