Meta’s Q1 earnings report has revealed that the company underestimated the cost of AI by at least $5 billion in capital expenditures. The adjustment in guidance from Meta was not surprising given the significant investments in the AI space. Companies like Meta, investing at such a large scale, may face challenges with costs in the short term.
Meta is currently facing legal issues, including an antitrust lawsuit and accusations from 33 states regarding the impact on children’s mental health. Additionally, product development and legal costs have also contributed to the rise in expenses for the company. The company predicts significant increases in operating losses for Reality Labs due to ongoing product development efforts and ecosystem scaling.
The new expenses are projected to be around $35 to $40 billion, compared to the original estimate of $30 to $37 billion. Furthermore, Meta’s minimum estimate for full-year 2024 total expenses will be $2 billion higher than expected. Despite these financial implications, Meta remains committed to advancing its AI capabilities.
