Meta's $600B AI Gamble: Stock Plummets 12%

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0:43Upload an episode and we distribute it to Apple Podcasts, Spotify, Amazon Music, and hundreds more. Track your listeners, see where they're from, and start earning from ads like this, even with just 10 listeners a month. If you've been thinking about starting a podcast, this is your sign. Start free at RSS.com.

1:10Today on the podcast, we're talking about Meta and their AI product problem. They are projected to spend as much as$600 billion in infrastructure, AI infrastructure over the next three years. But that actually caused their stock, that announcement caused their stock to take a huge dump of nearly 12%. And people are a little concerned with Mark Zuckerberg's plan to actually make money with AI. he's spending a lot, but can he actually make that money and provide shareholder value? That's the true question. Today, we're going to get all into that and discuss it. But before we do, Jayden, why don't you tell them about our school community?

1:48Yeah. So every single week, Jamie and I release an exclusive episode. We post it over on our school community about how we're using AI to make money and grow and scale our businesses. So I have a software company. Jamie has a very successful YouTube channel, And we have tons of other projects. Jamie's flipping houses and doing private lending. And I'm working on obviously this podcast, a network of podcasts and lots of other things. And so we share all of the tools, all of the strategies, everything we're doing. We break down the numbers that we basically don't share anywhere else. So you can join the AI Hustle School community.

2:22It is linked in the description. It is, I think, like$23 a month or something like that. An incredible value. you. This week, we recorded a whole video where I break down how much money I have made so far from an AI music project. I use Suno to generate some music. I put it on Spotify. I show you the analytics, the stats. This is an industry I've worked in for a long time. I also have a whole tutorial where I'm breaking down how to use the new Suno studio, how literally anyone can generate music, put it on Spotify, make money from it. I show my analytics, how much money I've made from this project that I did a couple months ago as the streams are and the algorithm is starting to pick up the whole project.

3:01It's really cool. So if you want to check it out, there's a link in the description to the Aihustle School community, along with like over 60 videos on different softwares we're using to build websites, to build software, to build tools, make money and grow our businesses. So you can go check it out. All right, let's talk about the qualms of meta. Jamie was not joking when he said that the meta stock took a massive crash. If you look at just their one month stock, they were hovering a little over$700 for basically the whole month. I mean, if you look at even a six month run, they're still up 6 % in the last six months.

3:36But that's not crazy, right? People expect, you know, meta to be to be growing more. But in the last month, month uh it's you know they're down 10 which most of that happened in the last five days which is down 15 and yeah they had a a massive crash it just looks like their whole stock went off a cliff basically and all of this stems from a comment that mark zuckerberg made which i will read you so he's on their earnings call um everyone was kind of concerned because their their operating expenses went up by about seven billion dollars year over year and almost 20 billion dollars in capital expenses.

4:14So CapEx, that's buying GPUs. This is all as a result of a lot of spending on two things. Number one is AI talent. I think that would be more of the operating expenses, the 7 billion that went up and then infrastructure. And I think that's CapEx. That's more related to the$20 billion that happened. So basically these big jumps are because they're spending so much on talent infrastructure. And none of this has really brought meaningful revenue to the company. If you're looking at Meta's revenue, it's mostly still just being made from Facebook ads, which zuckerberg argues that like spending heavily on ai like they use ai in their algorithm but they were doing just fine with their algorithm before so it's kind of an interesting point i think mark zuckerberg doesn't want to get left behind this is what he said specifically i'll give you this quote he said the right thing to do is to try to accelerate this and make sure that we have the compute we need both for the ai research and the new things that we're doing and to try to get a different state on our compute stance on the core business.

5:10He then went on to say, our view is that when we get the new models that we're building in MSL in there and get like truly frontier models with novel capabilities that you don't have in other places, then I think that this is just a massive latent opportunity. Jamie, what like in your opinion and from what you're seeing here, I mean, their stock dropped 12 % on that. I think it dropped like up to 15 % that week. This is kind of crazy. That's$200 billion that got wiped out of their market cap. Where is Meta today? Is it so over or are they going to survive? I mean, I don't think it's over by any means.

5:53I think the problem here is that I think Mark Zuckerberg kind of wants to be like a Tim Cook character from Apple, like designing all these revolutionary products that changed the world. And he thinks, you know, they have a lot of these. I think he's a dreamer, honestly, at heart. And he has the means financially to try some of these projects, but then, you know, not necessarily a revenue plan behind it. Like you said, like there's, you know, over the years, there's been lots of different, honestly, cool products that have come out, like Oculus and, you know, stuff like that. But it's not like a product that everyone has to have.

6:29and is spending billions of dollars on. So I think that's the trouble here is you have a software company who is really good at doing ads and things like that, trying to branch into other stuff and spending a ton of money on it. So yeah, I mean, that's kind of my opinion on it. What's yours? I think it's interesting. I think that Zuckerberg basically has to spend a ton of money on whatever the newest thing is so that people don't like hate him in a weird way because he basically created like the ultimate money making machine. What's interesting is if you look at their quarterly profit, it was$20 billion in quarterly profit.

7:07So that's like, you know, 80 billion in annual, like an annual profit. And I bet this, you know, the fourth quarter of every year with like Christmas spending, I bet is up. So like, let's say Meta is going to make$100 billion in profit every year. That is insane. That is a lot of money. What do they put the money into? Well, they basically dominate social media. Like, I don't know if they're going to create any revolutionary new features on Facebook that are going to make people use Facebook that much more. And so at the end of the day, they have to look at what is basically driving traffic as a whole online.

7:40What are the hottest things? And that's, I think that's AI. ChatGPT has, you know, 800 million weekly active users. They just need to try to copy that and then they could get a ton more users on quote unquote meta tools and products. it doesn't seem like they're competing very well right now with meta ai they're hoping to do that and i think that's why they spent so much money on infrastructure and research is to try to catch up google seems to be catching up well to um open ai meta does not but i think they need to spend this money because they know that if they lose this there's no coming back like if open ai and google run away with this industry maybe anthropic and claude meta will never catch up they're just going to have to be like apple and license the ai technology into their tools and i don't think they want to do that.

8:24They don't want to look like the one that got left behind. They probably already feel like Facebook died a lot in like users and use cases. Thank goodness for Facebook marketplace. It's like the only reason I log into that app anymore. But I think that they seriously, I think that they need to spend a lot of money to try to stay relevant. And that stresses people out. But Zuckerberg basically owns a majority of the company and he's got super majority like voting rights or whatever. So he can do whatever he wants. And I think I think at the end of the day, this is the battle they have to win is to compete with chat GPT if they want to be super relevant and keep making money, but they don't really have a money problem.

8:59Like people complain that they spent$20 billion in CapEx, like on data centers. Okay. They literally made $20 billion in revenue. So I don't know. I don't think it's a big deal. Yeah. Yeah. Right. Yeah. That's a good point. Yeah. I, when you think about it as a race to yeah, stay relevant, I do feel like, yeah, spending now in the infrastructure and things like that is going to, you know, save them long term as a company. So, yeah, it's still it's tricky. It's like, how do you make something that's how do you just not copy open AI with your like what you have to offer? And I think they're trying, you know, with some of the some of their like the meta AI app seems very much more social and more like entertainment based and like actual business.

9:47utilization and tools. But yeah, I don't know. It's a tricky, tricky balance. One thing that's interesting is it's so hard to know just how many users are on Meta's AI. They're like AI assistant. Apparently, Zuckerberg on the call, he likes to say this a lot, said that there was more than a billion active users of Meta AI. But this is like such a fake metric because basically if you go on Instagram and do a search, they just call the search bar meta AI, and it's meta AI serving you the searches. So like, if I'm going and just like searching to go follow Jamie on Instagram, I use meta AI. And since they have, you know, 3 billion people on Facebook and Instagram, it's I hate that I wish they would just tell you how many people are exclusively using the actual tool.

10:30They did have a new like vibe video builder that actually generated a lot of new, like a user spike for making videos. But then of course, we had um then we had uh opening eye that made Sora and I think that kind of took the wind out of the sails of this I don't know how long term uh have you tried Sora by the way Jamie

10:56oh yeah I'm a big fan of Sora and I I even like swiping through some of other people's videos to see what they made so I actually am using it more than I thought I would so do you like what is your what is your opinion on that? Because I mean, this is kind of something that meta has put a big bet on, uh, in the industry longterm. Like, do you think the AI generated videos will stick around? Do you think they're like a fad that will fade?

11:21Um, I know, I think we'll be around. I think, um, the problem would be AI slop essentially, and kind of cheapening the, I could see it driving people away from Facebook, for example, if, if people start swiping and all they see is AI slop, But I think there's a place for it. And I think if I think they need to figure that out algorithmically, too. So I think it's I think it's fun. I think so, especially in the social context is kind of kind of a fun thing. But I could see it being turning people off, too. So I guess I think, you know, the live streaming, more authentic type social media will continue to grow.

12:03But I think there'll be a place for the video long term as well. And I mean, evidently, people are interested in it. So I think basically Zuckerberg and Meta have to like try to go out on any new trending thing, right? Like the AI generated video was kind of trendy. So they put out the whole tool and they did see a sizable increase. Their Meta AI app, which is smart, I think, of them to bake it into the Meta AI app and not just make a standalone app like Sora. They went from 4000 daily downloads on Meta AI, which is not great in October last year to this year. they had 300 ,000 new downloads a day.

12:40And that's up from 200 ,000 a few weeks before that. So, you know, they're like at 200 ,000, then they put out this new thing and they jump up to like 300 ,000. So I think when they try to hit these new trends, they are able to get a lot of usage. Their daily active users have been growing. It's still not crazy, right? They have like, I don't know, like 3 billion users on Facebook and Instagram and when you look at like meta AI daily active users, it's like 2.8 million and that's compared to like OpenAI's 800 million daily or weekly active users. So I don't know. They have a lot of, I think they have a lot of work to do.

13:18I guess that is also weekly versus daily active users. So maybe you could 10X that, but it seems like they're quite far behind OpenAI. They got to catch up and Zuckerberg's going to spend an unlimited amount of money to try and achieve that. That's kind of my opinion. no i think you're right for sure well hey if you enjoyed this episode be sure to leave us a rating or review wherever you're listening i really appreciate those and they help us reach more people and also check out our school community if you're interested in growing your business with ai or making money on the side it's a great place to be and we really enjoy it so thanks for listening and we'll see you next time

14:01Thank you.

14:42Hey guys, Lady Luck here. Are you going on any road trips this summer? I know I'm going to be going on a bunch of road trips. And being that I'm going to be Passenger Princess, I love playing on SpinQuest.com. SpinQuest has all of my favorite slot games, live blackjack, live craps. Head on over to SpinQuest right now and get yourself a$30 coin pack for just$10. SpinQuest is a free-to-play social casino. Avoid where prohibited. Visit SpinQuest.com for more details. You're listening to a podcast right now. Driving, working out, walking the dog. If you're into podcasts, chances are you have something to say too.

15:20With RSS.com, starting your own is free and easy. Upload an episode, and we distribute it to Apple Podcasts, Spotify, Amazon Music, and hundreds more. Track your listeners, see where they're from, and start earning from ads like this, even with just 10 listeners a month. If you've been thinking about starting a podcast, this is your sign. Start free at rss.com.