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Tech stocks fell in premarket trading Thursday after Facebook parent company Meta Inc.’s lackluster outlook surprised investors across the industry, a sign that Wall Street’s appetite for embracing artificial intelligence is seemingly limitless. There is no indication that it may not match the enthusiasm of Silicon Valley.
Meta CEO Mark Zuckerberg defended the company’s spending on AI.
important facts
Meta shares rose after the company told investors to expect slower growth and higher spending on AI going forward as there is no clear path to how the technology will become a revenue stream for the company. , which plunged more than 15% during premarket trading. It makes its money almost exclusively through advertising.
The economic downturn led to widespread selling in major tech stocks, including Google’s parent company Alphabet, Microsoft, and Amazon, all of which were down 2% to 3% in the premarket period.
Social media companies Snap and Pinterest also fell 4% to 5%, and recently emerged Reddit fell less dramatically by about 1%.
Nvidia, the chipmaker that makes the hardware essential to building AI systems and whose value soared earlier this year amid a technology boom, initially fell about 2% during premarket trading, but as the market approaches its opening. It recovered significantly over time.
Apple and Tesla were generally spared the broader economic downturn, while software maker Palantir and hardware maker Dell also fell 2% to 3%.
The decline comes ahead of higher tech profits announced by giants Microsoft, Alphabet and Intel on Thursday.
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Meta, like many technology companies, is moving quickly to embrace generative AI, which has become Silicon Valley’s latest gold rush. While AI has long been touted as a transformative and disruptive technology, the launch of OpenAI’s ChatGPT in 2022 will help train users to generate unique content such as text, images, video, and audio based on prompts. This was a groundbreaking event for a system that can do this. The chatbot has become a hit among consumers, sparking a frenzy for the technology and drawing major companies such as Google, Microsoft, Meta, and Amazon into an AI arms race to reveal their own AI products. , now to improve and invest. The tech giant has since developed and released a series of increasingly powerful systems, alongside a number of startups including Anthropic, Mistral, and Inflection AI. The path to profitability with AI isn’t always clear, but it shows little sign of slowing down. Last week, Meta released its AI assistant, Meta AI, as a standalone tool. The bot complements in-app tools on platforms like WhatsApp and Instagram, and is powered by Llama 3, a powerful open source AI model, that complements standalone tools from other market leaders such as OpenAI’s ChatGPT and Alphabet’s Gemini. A clear effort to compete with bots. .
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“At this point, you all know our product development strategy,” Meta CEO Mark Zuckerberg told investors on Wednesday. He tried to placate investors by pointing to the company’s historic process of scaling before becoming a flop. “There are ways to build a large business here,” Zuckerberg said, noting that this is happening with products like Reels and Stories, as well as the news feed’s move to mobile. Zuckerberg said he believes something similar will happen with meta-AI over time, but cautioned that it will take time for these investments to bear fruit. “Realistically, even if we shift many of our existing resources to focus on AI, we will likely significantly expand our investment horizon before we see much revenue from some of these new products. “Yes,” Zuckerberg said.
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IBM stock fell nearly 9% during premarket trading. The company announced unimpressive sales numbers in its earnings report Wednesday.
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Zuckerberg’s net worth is estimated at $173.1 billion. Most of his fortune comes from the founding stock of Mehta’s predecessor, Facebook, making him the fourth richest person in the world after Bernard Arnault, Jeff Bezos and Elon Musk. But he has publicly feuded and agreed to fight within the Republican Party. cage match. Zuckerberg and his wife Priscilla Chan have promised to give away 99% of their Meta shares during his lifetime.
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