Meta shares fell over 8% as a 16 billion dollar US tax charge slashed quarterly profit, despite revenue beating expectations

SAN FRANCISCO: Meta shares plunged more than eight percent in after-hours trading after the tech giant reported a roughly 16 billion dollar US tax charge significantly reduced its quarterly profit.

The parent company of Facebook, Instagram and WhatsApp stated its net income would have reached 18.64 billion dollars in the recent quarter without the one-time tax charge prompted by provisions in President Donald Trump’s One Big Beautiful Bill Act.

Quarterly revenue however exceeded analyst expectations at 51.2 billion dollars, marking a 26 percent increase from the same period a year earlier.

Meta also raised its forecast for how much money it expects to spend this year as it invests heavily in becoming a leader in artificial intelligence.

The company expects capital expenditures to total between 70 and 72 billion dollars, at the higher end of a range it had previously disclosed.

Costs and expenses in the quarter were 30.71 billion dollars, an increase of 32 percent from the same period last year, with some of that cost allocated to talent for Meta’s AI efforts.

Chief executive Mark Zuckerberg said on an earnings call that he is very focused on establishing Meta as the leading frontier AI Lab, building personal super intelligence for everyone and delivering improved app experiences and computing devices.

He added that the company is heads down developing its next generation of models and products.

Meta’s Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, saw daily active users reach 3.54 billion in the quarter, up 8 percent from a year earlier.

Meta announced earlier this month that it will begin using people’s conversations with its AI chatbot to tailor ads and content they see on Facebook and Instagram.

The company also recently showed off new smart glasses as it continued to bank on a lifestyle shift toward blending reality and virtual space despite the efforts inflicting heavy financial losses.

Announcements included the debut of Meta Ray-Ban Display smart glasses that have built-in screens allowing wearers to see messages and photos as though looking at a smartphone screen.

Zuckerberg has predicted that AI-infused smart glasses will be the next major computing platform, eventually replacing the smartphone.

But Reality Labs, Meta’s virtual and augmented reality unit, has consistently posted big losses.

Meta is locked in a bitter rivalry with other tech behemoths as they invest heavily in AI, aiming to ensure the technology benefits society and generates profits in the not-so-distant future.

Most analysts believe Meta will make the investment pay off by improving its advertising efficiency and creating new opportunities, such as with its smart glasses through a partnership with Ray-Ban maker EssilorLuxottica. – AFP

 The Sun Malaysia