Meta stock tanks as aggressive AI spending worries Wall Street

Caroline Woods brings the latest business headlines from the floor of the New York Stock Exchange on Thursday, April 25.

Related: Analysts reset Facebook-parent Meta stock price targets amid post-earnings plunge

Full Video Transcript Below:

CAROLINE WOODS: I’m Caroline Woods reporting from the New York Stock Exchange - here’s what we’re watching on TheStreet today. 

Wall Street is looking ahead to key inflation data out Friday. The Fed’s preferred inflation gauge —the Personal Consumption Expenditures Price Index — measures how much consumers are spending on goods and services.

This will be the final data on inflation before the Federal Reserve makes its next decision on interest rates on May first. Markets are pricing in a 96 percent chance that the central bank holds rates steady.

Meanwhile, shares of Meta  (META) fell sharply after the company announced higher than expected spending on artificial intelligence in its first-quarter earnings report. The tech giant said it expects to spend anywhere between $35 and $40 billion in the coming year, up from previous estimates of 30-37 billion, driven heavily by investments in AI.

On an earnings call with investors, CEO Mark Zuckerberg doubled down on AI saying Meta wants to be the leading AI company in the world, adding that the company needs to increase spending meaningfully before expecting to generate revenue in AI.

These comments spooked investors and threatened to wipe almost 163 billion dollars off its market value.

This all comes roughly a week after Meta deployed its AI assistant on Instagram and Facebook. Meta says the tool has been used by tens of millions of users.

That’ll do it for your daily briefing - from the New York Stock Exchange, I’m Caroline Woods with TheStreet.