On Thursday, Meta stock plummeted as investors were alarmed by the company's audacious strategies to increase spending on artificial intelligence. As the Nasdaq opened, Meta stock fell as much as 15% to $421.40, wiping out an astounding $183 billion from its market capitalization. The decline, which commenced in Wednesday's after-hours trading, indicates investors' apprehensions regarding the considerable expenses Meta incurs in its endeavor to establish an AI-powered future.
Meta Quarterly Earnings Outlook
Meta Platforms, the parent company of WhatsApp and Instagram, disclosed in its earnings report that first-quarter profits increased by 27% year-over-year and revenue surged by 28%. Notwithstanding this, shareholders were uneasy at the prospect of potential future augmentations in the projected investments in artificial intelligence, which reached up to $5 billion.
Moreover, Meta has revised its full-year capital expenditure forecast from $30-37 billion to $35-40 billion in light of its increased infrastructure investments to support its artificial intelligence initiatives. The organization underscored its dedication to substantial investments in artificial intelligence (AI) research and product development, anticipating ongoing escalations in capital outlays.
Meta CEO On Business Guidance
CEO Mark Zuckerberg, speaking on an investor call, emphasized Meta's ambition to become the preeminent AI company worldwide and pledged a substantial augmentation in financial resources in the coming years to propel AI capabilities forward. Although anticipating significant expenditures prior to generating income from novel AI products, Zuckerberg conveyed assurance in the organization's capacity to generate revenue from these services efficiently.
In addition, investors' concerns may be exacerbated by Meta's less-than-expected guidance for the current quarter, as the company's projected revenue of $36.5-39 billion falls short of analysts' $38.2 billion target.
Meta Stock Forecast Technical Analysis
In the daily chart of Meta stock price, the recent fundamental event initiated selling pressure taking the price below the dynamic 100 day Simple moving Average line. However, the latest daily candle reversed and had a close above the major line . Moreover, the 406.57 static support level is still protected as the recent bearish momentum failed to come below this line.
In the broader context, the recent downside pressure from the 531.29 high came with an RSI divergence, while the current value of RSI is 32.00. In other technical indicators, the MACD Histogram maintained the downside pressure, while the ADX line is at the 22.58 level.
Based on this outlook, more downside pressure might come following the fundamental outlook. In that case, a bullish opportunity might come from the 380.00 to 320.00 zone. However, an immediate buying pressure, eliminating the gap can resume the buying pressure, targeting the 580.00 line.
