Meta Platforms, owner of social media giants Facebook and Instagram, revealed on Wednesday its anticipation of escalating yearly expenses, due to heavy investment in the launch of fresh AI technology and strengthening of the supporting infrastructure. The news resulted in a 10% drop in the company’s stock after the New York market closed.
Meta now estimates its capital expenditure for 2024 to be within the region of $35 billion (£26 billion) to $40 billion (£30 billion), a significant increase compared to their preceding prediction of $30 billion (£22 billion) to $37 billion (£27 billion). The firm also inflated its estimates for total expenditure to the bounds of $96 billion (£71 billion) to $99 billion (£73 billion), compared to the previous estimate of $94 billion (£69 billion) to $99 billion (£73 billion).
The company has been upgrading its advertising products with artificial intelligence and short video format enhancements to drive revenue growth. Simultaneously, it has launched fresh AI features, including a chat assistant to increase engagement on its social media platforms. Reported revenue for the opening quarter was up 27% to $36.46 billion (£27 billion), outperforming the London Stock Exchange data expectations of $36.16 billion (£26.7 billion).
Simultaneously, IBM has announced the acquisition of HashiCorp, worth $6.4 billion (£4.74 billion), to extend their range of cloud-based software offerings and capitalise on the surge in demand for AI-powered solutions. This area has been a beacon of success for IBM amidst a cautious wider landscape, as companies grapple with rising interest rates. With a first-quarter adjusted profit that surpassed Wall Street’s estimates, IBM continues to intensify its focus on its cloud operation, crucial for the storage and processing of vast data quantities vital for AI applications.
IBM’s first-quarter “AI business portfolio” exceeded $1 billion (£740 million), showing ongoing growth. This portfolio includes both real sales and bookings from an array of offerings. Funded by existing cash reserves, the acquisition is expected to contribute to adjusted core profits within the closing year, anticipated to be by the end of 2024.
HashiCorp, a California-based company, offers its customers services to create and regulate their cloud infrastructures. Stephen Elliot, a vice-president at the market research firm International Data Corp, expressed on Tuesday that the deal serves as a catalyst for cloud infrastructure automation growth for IBM. Elliot further noted that this deal beautifully augments IBM’s Red Hat business.
In the first quarter, the software revenue saw an increase of 5.5% whereas consulting services remained unchanged. The total revenue was a tad less than what London Stock (LSEG) estimated, drawing $14.46 billion (€13.5 billion) against the projected $14.55 billion (€13.6 billion).
During these times of uncertain economic conditions, Jim Kavanaugh, CFO, mentioned to Reuters, clients are being cautious about discretionary spending. In light of reduced client spending on its consulting services, Accenture revised its revenue forecast for the fiscal year 2024.
Furthermore, Accenture’s reported adjusted earnings for the quarter ending in March were $1.68 per share. This figure was higher than the average analysts’ prediction, which was $1.60 per share. This data is subject to copyright of Thomson Reuters 2024.