Shares of Meta Platforms dropped nearly 10% at the opening of Wall Street on Thursday, April 30, in sharp contrast to Alphabet Inc., whose stock surged by more than 6%.
The contrasting performances underscore how investors are beginning to differentiate between Big Tech companies based on their strategies for heavy investment in artificial intelligence.
Alphabet stood out as the top performer this earnings season, with investors responding positively to its strong AI push and solid results across its core businesses. The company posted profits of $62.6 billion on revenue close to $110 billion, comfortably exceeding expectations.
Meanwhile, Meta’s results unsettled the market after the company revealed a major increase in spending tied to its ambition of building “superintelligence.” Its projected capital expenditure—largely focused on data centers—was raised by $10 billion, bringing the total to between $125 billion and $145 billion.
Unlike Alphabet, Amazon, and Microsoft, which can help offset AI costs through cloud services, Meta currently lacks a clear, immediate revenue stream from its AI investments.
Concerns over AI spending also weighed on the broader tech sector, with Amazon shares falling about 2% and Microsoft declining 3.7% as investors questioned how quickly such investments would generate returns.
Despite these movements, the wider market remained relatively steady. The Dow Jones Industrial Average rose 0.8% to around 49,241, the S&P 500 gained 0.2% to approximately 7,151, and the Nasdaq Composite was largely unchanged at about 24,665.
Meta has recently taken steps to control costs, confirming plans to cut around 8,000 jobs and leave an additional 6,000 positions unfilled. Even so, with quarterly expenses reaching $33.4 billion, investors remain cautious about the scale of its spending.
