Meta, Microsoft shares plunge as investors fear AI spending is overhyped

Group 1: Market Reaction - Shares in Meta and Microsoft fell significantly after both companies announced plans to increase AI spending, raising investor concerns about the potential returns on these investments [1] - The tech-heavy Nasdaq index dropped by 1.3% amid fears that artificial intelligence investments may be overhyped [1] Group 2: Meta's Investment Plans - Meta plans to increase its capital expenditures for 2025 to between $70 billion and $72 billion, exceeding its previous forecast of $66 billion to $72 billion [2] - CEO Mark Zuckerberg expressed confidence in the returns from the core business, indicating a strong belief in the necessity of increased investment [2] Group 3: Meta's AI Initiatives - Meta has already made substantial investments in AI, including a nearly $15 billion stake in Scale AI, and has appointed its CEO to lead Meta's Superintelligence Labs [3] - The company is not alone in its heavy investments in AI and related infrastructure, which require significant upfront capital [3] Group 4: Microsoft’s Financial Performance - Microsoft reported a $3.1 billion decrease in net income in the first quarter, attributed to its substantial investment in OpenAI [5] - Despite the financial hit, Microsoft plans to continue its increased AI spending [5] Group 5: Microsoft’s Partnership with OpenAI - Microsoft has invested a total of $13 billion in OpenAI since 2019, with $11.6 billion funded as of the end of September [8] - Microsoft holds a stake in OpenAI valued at approximately $135 billion, representing about 27% of the company [9] Group 6: Meta's Bond Sale - Meta is looking to raise at least $25 billion from a potential bond sale, which has already attracted about $125 billion in orders, setting a record for the most ever offered [10]