Meta, the parent company of Facebook and Instagram, announced on Wednesday that its first-quarter profit has more than doubled. 

This impressive growth can be attributed to increased advertising revenue and a 6% rise in the average price of ads on its platforms. 

Meta's AI Spending Plans

However, its shares took a significant hit in after-hours trading due to less-than-enthusiastic revenue guidance.

In the January-March period, Meta Platforms Inc. reported earnings of $12.37 billion, equivalent to $4.71 per share. In the same period a year earlier, the figure stood at $5.71 billion, or $2.20 per share, which has now increased.

Meta announced a 27% year-over-year growth in first-quarter sales of $36.46 billion, exceeding analysts' expectations. However, Meta shares fell roughly 16% after market hours on Wednesday, after the company's first-quarter earnings.

Meta expects its second-quarter sales to dip between $36.5 billion and $39 billion.  Analysts predicted the company's revenue would be closer to $38.24 billion.

A second factor of Meta's report that is clouding the first-quarter performance statistics is the company's enormous AI investments, which CEO Mark Zuckerberg has stated will be required before the company can expect to see significant returns.

Meta estimates capital expenditures in 2024 to be in the $35 billion to $40 billion range, up from the $30 billion to $37 billion expectation, as it seeks to invest in artificial intelligence infrastructure.

READ NEXT: Japan Develops AI Tool That Analyzes Employee Data, Predicts When Worker Will Quit Job  

Mark Zuckerberg Thinks AI Can Help in Meta's Success

During the Wednesday earnings call, Zuckerberg informed shareholders that Meta's stock volatility was typical of any new project or feature the company was developing that wasn't immediately generating income. 

Mark Zuckerberg expressed his primary objective for the upcoming years as prioritizing the widespread adoption of Meta AI among millions or even billions of people, rather than solely focusing on generating revenue from it. 

Zuckerberg warned that features like Instagram Reels have historically taken time to generate revenue before becoming profitable components of Meta's ad business, The Guardian reported.

He expressed a similar forecast for Meta AI, emphasizing the importance of establishing a solid inventory before focusing on monetization. He highlighted Meta's strategy of prioritizing product expansion over immediate profitability.

Leading up to the first-quarter results, Meta unveiled the latest version of its chatbot, Llama 3, which will be the driving force behind the company's new AI assistant, Meta AI.

As stated by Zuckerberg, the AI assistant will be seamlessly incorporated into a variety of Meta's products, such as Instagram and Facebook.

READ MORE: TikTok Voluntarily Suspends New App's Task and Reward Program After EU Regulators Express Concern Over Addictive Effects Among Young Users