Those figures might not raise eyebrows in Silicon Valley, but they’re starting to make Wall Street nervous. 

The issue came to a head this week as Meta reported quarterly earnings, which showed the company’s operating expenses jumping $7 billion year-over-year and nearly $20 billion in capital expense. It was the result of intense spending on AI talent and infrastructure, which has yet to bring in meaningful revenue for the company. When analysts pressed for more specifics, Mark Zuckerberg made it clear the spending was just getting started. 

“The right thing to do is to try to accelerate this to make sure that we have the compute that we need, both for the AI research and new things that we’re doing, and to try to get to a different state on our compute stance on the core business,” Zuckerberg told analysts on the call. “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.” 

If his goal was to reassure investors, it didn’t work. By the end of the call, Meta’s share price had plummeted in value. Two days later, the rout has only deepened. The Meta’s stock dropped 12% by the closing bell on Friday, representing more than $200 billion in lost market cap. 

It’s dangerous to read too much into stock prices, and in strict financial terms, Meta’s quarterly earnings weren’t that bad. ($20 billion in quarterly profit is nothing to complain about.) But this was the first quarter in which Meta’s aggressive AI spending on both talent and infrastructure had a visible impact on the company’s bottom line. Even more alarming was that, aside from a lot of enormous data centers and well-compensated AI researchers, it wasn’t clear what the money actually bought.  

Analysts pressed Zuckerberg on why he was spending so much on AI, and when they could expect to see revenue from the growing spending. But the call came at an odd spot in Meta’s planning, with no clear budget for projected spending and no available product that could anchor a revenue forecast. As a result, Zuckerberg was left with only general claims about the promise of AI.  

“There are going to be all kinds of new products around different content formats, and we’re starting to see that,” he asid during the call. “And then there are the business versions of all these too, like business A … the other part is how more intelligent models are just going to improve the core business and improve the recommendations that we make across the Family of Apps and improve the recommendations in advertising.” 

Meta isn’t the only company spending billions of dollars on AI infrastructure, so it’s worth teasing out why this same spending isn’t spooking investors at Google or Nvidia, both of which had a great quarter. OpenAI is the biggest offender, spending the same amount with far less financial cushion than Meta.  

There really are concerns that we’re creating a bubble, and if we are, Meta’s core business will let it ride things out better than most. 

But if you ask Sam Altman why he’s spending hundreds of billions of dollars on compute, he’ll tell you he’s operating one of the fastest growing consumer services in human history — and one bringing in $20 billion a year in revenue. We can argue about how sustainable the growth rate is (that’s a separate blog post), but there really is a fast-growing product at the bottom of all the OpenAI hype. A fast-growing ARR figure goes a long way to answer questions. 

Meta doesn’t have a product like that, and it’s not clear where it’s going to come from.  

The company’s most powerful AI product is the Meta AI assistant, which Zuckerberg noted on the call has more than a billion active users. But those numbers are surely juiced by the three billion active users on Facebook and Instagram, and it’s hard to see the current version of Meta AI as a competitor to ChatGPT. There’s also the Vibes video generator, which really did boost daily active users, but has limited business impact beyond that.  

The most ambitious project is the Vanguard smart glasses released earlier this month. However, the glasses feel more like an extension of Meta’s Reality Labs work than a real attempt to harness the power of LLMs.  

Put simply, these are promising experiments, not fully formed products. 

It’s telling then that when he was pressed on infrastructure spending, Zuckerberg’s response wasn’t to point to the recent launches, but to focus on the next generation. 

Zuckerberg stressed, while emphasizing the pending impact of the Superintelligence Lab’s new models, that he was very excited about new products.  

“It’s not just Meta AI as an assistant,” he said. “We expect to build novel models and novel products, and I’m excited to share more when we have it.”  

But this was an earnings call, not a product launch, so all he could say was that there would be more to share “in the coming months.” 

As the market response showed that answer is wearing thin.  

To be fair, it’s only been four months since Zuckerberg restructured his company’s AI team, and the new Superintelligence team hasn’t had time to launch an earthshaking AI product yet. But as the company spends billions of dollars to stay competitive in AI, there’s still no clear indication of what role Zuckerberg wants to play in the new industry.  

Will Meta AI use the company’s detailed store of personal data to grow into a ChatGPT competitor? Is Vibes the first step in a consumer entertainment play, building off Meta’s targeted ad system? Or maybe Zuckerberg’s references to “business AI” are hints at a more detailed enterprise play? 

So far, it’s anyone’s guess. Whatever the answer, the pressure is on Meta to find it — and soon.