Meta's AI costs are about to go through the roof

Source: Quartz

Analysts expect Meta to thrive because of its new AI features and a “healthy” digital advertising market, driven in part by the upcoming U.S. presidential election. Despite forecasts of strong sales, the company’s stock could suffer — like Google and Tesla’s last week — if it posts higher-than-anticipated AI spending.

Wall Street is wary of hefty bills racked up by Big Tech as industry giants build out AI infrastructure and develop the latest artificial intelligence software. The Nasdaq hit its lowest point so far this year after Google and Tesla revealed their latest AI expenditures, apparently without sufficient answers for when those investments will start to pay off. Google’s expenditures are on a similar trajectory, with analysts expecting the company’s costs to increase 51% to about $50 billion in 2024.

But Mark Zuckerberg thinks Meta’s AI investments will begin to show their worth sooner than later. The CEO has said he thinks Meta’s recently-released Llama 3.1 will become the most widely-used AI model by the end of 2024 and “the most advanced in the industry” by the beginning of next year. And he’s willing to spend the money — and possibly overspend — to continue Meta’s AI advancements.

"I think that there’s a meaningful chance that a lot of the companies are over-building now, and that you’ll look back and you’re like, ‘Oh, we maybe all spent some number of billions of dollars more than we had to.’ On the flip side, I actually think all the companies that are investing are making a rational decision, because the downside of being behind is that you’re out of position for like the most important technology for the next 10 to 15 years," said Mark Zuckerberg in a recent interview with the Los Angeles Times.

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