Overview:
- Meta share plans to distribute its inaugural dividend of 50 cents and has given the green light for a $50 billion share repurchase program.
- The increased buyback represents about 5% of Meta's outstanding shares, considering the company's $1 trillion market capitalization.
- Meta intends to issue the cash dividend on a quarterly schedule, as announced by the company.
Meta share jumps on upbeat outlook and new dividend.
Meta Platforms saw a significant surge in meta share during late trading on Thursday following a revenue forecast for its March quarter that exceeded expectations.
In the fourth quarter, Meta share reported adjusted earnings per share of $5.33, surpassing the Wall Street consensus estimate of $4.82.
The company's revenue for the quarter reached $40.1 billion, beating analysts' expectations of $39.1 billion.
The guidance provided by Meta was also strong, with a first-quarter revenue projection in the range of $34.5 billion to $37 billion.
Wall Street's estimate for the quarter was $33.9 billion. Meta's board of directors declared its inaugural dividend, set at $0.50 per share and scheduled for payment on March 26, 2024.
In response to these positive results, Meta shares experienced a nearly 9% increase.
Meta details AI investment plans
Last year, Zuckerberg mentioned that artificial intelligence would be Meta's main focus in 2024. Recently, the company gave some insights into how they plan to allocate funds in this area.
Meta anticipates its annual capital expenditures to range from $30 billion to $37 billion, marking a $2 billion upward adjustment from the top end of the previously stated range.
The increased spending is attributed to investments in artificial intelligence, as well as non-AI servers and data centers, including the construction of new data centers. (Capital expenditures broadly refer to a company's spending on physical assets like factories or equipment.)
In their recent announcement, Meta explained that their revised outlook is influenced by their evolving understanding of the demands on their artificial intelligence (AI) capabilities. They are preparing for the next phases of foundational research and product development, acknowledging that the ambitious long-term AI initiatives will require increased infrastructure investments beyond the current year.
Meta introduced new AI tools last year to support brands, aiming to boost their advertising business that had been impacted by Apple App Store privacy changes in 2021. According to Li, the initial adoption of these features has been robust, and Meta plans to prioritize investments in AI ads throughout 2024.
Mark Zuckerberg also revealed Meta's intention to develop its artificial general intelligence (AGI) earlier this month, signaling the company's commitment to remaining a significant player in the ongoing AI competition.
Meta continues substantial investments in its Reality Labs unit, dedicated to building the metaverse—an immersive version of the internet relying on virtual and augmented reality. In 2023, Meta reported a loss of over $16 billion for Reality Labs.
Li anticipates that the current year's operating losses for Reality Labs will increase significantly.
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