Meta Platforms Inc., formerly known as Facebook, maintains its supremacy in social platforms under CEO Mark Zuckerberg’s leadership. In the first quarter of 2024, the firm outperformed financial analysts’ predictions, with revenues slightly higher than expected and Earnings Per Share rising to $4.71 from $4.32. Despite these excellent findings, the company’s shares fell by double digits in the stock market following the closing.

Meta’s stock price is trending downwards on Thursday even though the company reported first-quarter earnings that were stronger than anticipated on Wednesday. With predictions of increased costs and lower-than-expected income, Meta’s shares are quoting 13% lower in the pre-market session on Thursday.

Investors are concerned that the rising cost of AI may outweigh its advantages.

Q1 total revenue was $36.5 billion, up 27% on both a reported and constant currency basis and Meta expects second quarter 2024 total revenue to be in the range of $36.5-39 billion.

Q1 total expenses were $22.6 billion, up 6% compared to last year and Meta expects full-year 2024 total expenses to be in the range of $96-99 billion, updated from their prior outlook of $94-99 billion due to higher infrastructure and legal costs

Meta also anticipates their full-year 2024 capital expenditures to be in the range of $35-40 billion, increased from their prior range of $30-37 billion as the company continues to accelerate their infrastructure investments to support our AI roadmap.

Reality Labs operating loss was $3.8 billion.

“The market’s response to the second-quarter projections reflects investors’ sensitivity to any signs of weakness or uncertainty, even in leading companies like Meta Platforms Inc. Competition in the information technology sector is fierce, and growth expectations are incredibly high. In this context, any deviation from expectations can significantly impact a company’s valuation in the stock market,” says Antonio Ernesto Di Giacomo, Market Analyst Latam at xs.com.

In Q1, the total number of ad impressions served across our services increased by 20% and the average price per ad increased by 6%. Meta ended the first quarter with over 69,300 employees, up 3% from Q4.

Last week Meta had the major release of their new version of Meta AI that is now powered by latest model, Llama 3. Meta believes that Meta AI with Llama 3 is now the most intelligent AI assistant that one can freely use within WhatsApp, Messenger, Instagram, and Facebook.

“Although it exceeded expectations regarding revenues and profits, the adverse market reaction to second-quarter projections underscores the constant pressure on technology companies to maintain solid growth and meet investor expectations. In an increasingly competitive business environment, Meta’s ability to innovate and adapt will be crucial for its continued success in the future,” adds Giacomo.

Right now, about 30% of the posts on Facebook feed are delivered by AI recommendation system. And for the first time ever, more than 50% of the content people see on Instagram is now AI recommended.

Microsoft and Alphabet are set to report their first-quarter earnings after the bell on Thursday.