Investing.com– Shares of Meta Platforms Inc (NASDAQ:) fell sharply in after-market trading Wednesday, after disappointing forecasts for second-quarter earnings more than offset strong first-quarter earnings, and sales they spilled over into other major tech stocks.
Meta shares fell 15.3% to $417.83, a nearly three-month low, after it forecast second-quarter revenue of $36.5 billion to $39 billion, or $37.75 billion. dollars halfway, lower than estimates of $38.3 billion.
Meta stock’s losses have spilled over to other large Internet companies, as they set a grim tone for the sector’s upcoming earnings. Microsoft Corporation (NASDAQ:) fell 1.9% in aftermarket trading, while Class A shares of Google parent Alphabet Inc (NASDAQ:) fell 3%. Both companies will report first-quarter earnings Thursday after the bell.
Losses at Meta and its rivals slipped more than 1% on Wednesday.
Meta’s weaker-than-expected forecast was fueled largely by expectations of rising costs as the company ramps up its investments in artificial intelligence. Capital expenditures for 2024 are now expected to be between $35 billion and $40 billion, up from the previous range of $30 billion to $37 billion.
The rising costs largely offset the Facebook owner’s higher-than-expected first-quarter earnings.
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Meta’s gains will likely set a precedent for other large Internet companies, which will have to incur higher costs to gain an advantage in artificial intelligence processing, which has become wildly popular in the past year.
While majors like Microsoft have already made more money through AI, costs have steadily increased given the high computational requirements of AI programs.
However, Goldman Sachs (NYSE:) maintained its buy rating on Meta, saying that while an initial negative reaction from investors was expected due to the weak outlook, AI still has potential and that the stock has recorded strong year-over-year performance in 2024.
