Daring to ask where the AI road lies, Musk confidently answered "the future is limitless," while Meta's answer made people feel "the future is bleak.". This also resulted in the two companies facing completely different market treatments after their financial reports were released.
Despite disclosing strong first quarter financial reports, Meta's stock price plummeted by 15% after US stock market hours on Wednesday, due to a significant increase in annual capital expenditure. Its executives had an ambiguous attitude towards its AI investment and revealed a hint of "luxury" that scared the market, causing many people to worry that Meta will once again embark on the path of pouring money into promoting its metaverse strategy.
Meanwhile, Meta's avoidance of investment returns in artificial intelligence has also led many investors to question the reality of AI implementation. Meta CEO Zuckerberg's comment that "smart investors don't look at the short term but look at the long term" has successfully sparked market sentiment.
Jasmine Enberg, Chief Analyst at Insider Intelligence, stated that investors are skeptical of (Meta)'s growing spending on artificial intelligence, as they see that some investments may take several years to yield returns.
This also dragged down the overall technology stocks. After Wednesday trading, technology giants such as Alphabet, Microsoft, and Amazon, which have not yet disclosed their performance, were the first to experience a stock price decline, with Alphabet leading with a 3% decline.
In addition to Meta's old rivals, other artificial intelligence stocks have also followed the decline. Stocks of companies such as NVIDIA, AMD, AMD, Dell, and Palantir also fell after hours, fully reflecting the super power of Meta's "simple" financial report.
Pressure on Alphabet and Microsoft
Jack Ablin, Chief Investment Officer of Cresset Wealth Advisors, stated that although Meta will adopt artificial intelligence in its work, it does not seem to be the biggest beneficiary of AI adoption at present. The market currently cannot see what benefits artificial intelligence will bring to users, although this technology may ultimately mean some cost savings, which is not yet visible.
Sophie Lund Yates, Chief Stock Analyst at Hargreaves Lansdown, pointed out that without all of Meta's bold artificial intelligence plans, the core of its business remains advertising.
The current market question is how Meta, and even more technology companies, can transform their costly artificial intelligence into a profit booster for their core businesses. Obviously, Meta's financial report did not provide an answer, which greatly disappointed the market.
This also puts a lot of pressure on Microsoft and Alphabet, who released their financial reports on Thursday, and their Q1 financial reports will become a key signal for the market to continue to believe in the AI story or leave first.
Wall Street analysts predict that Microsoft's financial report, which surpassed Apple earlier this year to become the world's most valuable company, may show that its billion dollar investment in generative artificial intelligence is attracting customers to use its Azure cloud computing services.
Nevertheless, most of the driving force brought about by artificial intelligence is expected to be realized starting next year. According to Morgan Stanley analysts, Copilot products will contribute $5 billion to Microsoft's revenue in the 2025 fiscal year starting in July.
Alphabet may need to wait longer, and several analysts have pointed out that Google (a subsidiary of Alphabet) is not in a hurry to monetize AI technology, and Google Cloud may need more time to benefit from artificial intelligence integration. And this may test the market's confidence in Google and artificial intelligence.