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Despite having almost nothing to show from his enormous spending on AI, Meta CEO Mark Zuckerberg is doubling down.<\/p>\n
Earlier this week, the social media company announced during its second quarter earnings call that it was raising capital expenditures from $125 billion to at least $130 billion, a clear sign that it\u2019s not taking its foot off the pedal.<\/p>\n
Yet amid renewed concerns that the tech industry may be nearing the edge of a cliff thanks to its obsession with building out enormously expensive data centers without a clear path to profitability, investors sent back a clear signal in return. Meta\u2019s shares nosedived following its announcement, plummeting over 11 percent over the last five days alone.<\/p>\n
According to Zuckerberg, all that extra AI spending was \u201caccelerating every part of our core business.\u201d He also claimed that some of the tech would be sold off to other businesses.<\/p>\n
But whether the company will have anything compelling to offer them remains dubious at best. Meta has been burning through its funds at an alarming rate. Even strong revenue numbers \u2014 a 28 percent increase this latest quarter compared to the same period last year \u2014 couldn\u2019t stem the bleeding, with free cash flow sinking to the lowest level in at least five years<\/a> thanks to AI spending.<\/p>\n Despite committing well over $100 billion to the tech, Meta has been practically absent from the frontier AI model race. Its so-called Superintelligence Lab has turned into a \u201csoul-crushing gulag<\/a>\u201d plagued with rock-bottom morale<\/a> \u2014 and most importantly, it\u2019s not getting results.<\/p>\n Its efforts to develop an in-house frontier model, dubbed Muse Spark, have been mired by setbacks<\/a>, with Meta continuously shifting back the timeline of its release to developers. On July 11, the company released version 1.1 of its AI to little fanfare, with Axios noting<\/a> that it\u2019s still easily outdone in most tasks by competing models from OpenAI, Anthropic, and Google.<\/p>\n At the same time, Meta released an image-generation model called Muse Image, which felt like an afterthought and a too-little-too-late attempt to catch up with its competitors.<\/p>\n The latest news has given some analysts a feeling of d\u00e9j\u00e0 vu. Zuckerberg has garnered a reputation for making major strategic missteps since long before AI. Case in point was the company\u2019s heavily criticized pivot to the \u201cmetaverse,\u201d an ill-fated attempt<\/a> to sell customers on the idea of spending their workday inside a hollow and cartoonish virtual reality world, which feels like the perfect precursor to Meta\u2019s current pains.<\/p>\n \u201cThere\u2019s a bit of similarity to Meta\u2019s metaverse missteps in that Meta is once again spending ahead of proven product demand,\u201d Forrester analyst Mike Proulx told the BBC<\/a>. <\/p>\n Meanwhile, Meta\u2019s platforms have descended into a practically unrecognizable ocean of clickbait and AI slop, something the company has yet to meaningfully address as user numbers and engagement continue to slide<\/a>.<\/p>\n For his part, Zuckerberg remains infatuated by the concept of AI agents \u201cthat can work 24\/7 on your behalf,\u201d as he told investors this week, and growing its Muse Spark model into a \u201clarge business for large businesses.\u201d<\/p>\n But considering Meta is entering a game with much bigger players who\u2019ve seen far more success in attracting customers and growing AI revenue so far, the company\u2019s long-term success is anything but guaranteed.<\/p>\n And investors who\u2019ve already shaken their heads after both Amazon and Google\u2019s parent company Alphabet announced major spikes in AI spending this month haven\u2019t taken kindly to Zuckerberg\u2019s lofty vision. Judging by how little the billionaire has to show, who can blame them?<\/p>\n