Meta’s AI strategy once again worries investors.

Shares of the social media giant fell 10% on Wednesday after revealing that its capital spending growth far outpaced revenue growth.

Meta has a central problem: much of this spending still has no financial return. About 98% of Meta’s revenue still comes from its traditional advertising business, according to its second-quarter results.

Meta has been trying a lot of new things lately, like rolling out new subscriptions, smart glasses, and apps. It is also considering selling AI computing to other companies. All of these moves leave its actual AI strategy unclear, said EMARKETER senior analyst Minda Smiley.

“These continued releases increasingly feel like the company is throwing spaghetti against the wall rather than rallying around a sustainable way forward,” he wrote in a note.

A Meta spokesperson told Business Insider that Meta’s AI investments power its business by helping teams build faster and customers advertise better. For example, 9 million small businesses use Meta’s AI image editing tools. Additionally, since adding its latest AI model, Muse Spark, the company has seen a 60% increase in the number of people interacting with its AI assistant each day, the spokesperson added.

On the earnings call, CEO Mark Zuckerberg also argued that it’s still early in Meta’s journey to AI. He said Meta is working on significantly more powerful AI models that will drive future revenue growth, and touted Meta’s most recent AI model releases, which performed well in industry rankings.

Zuckerberg predicted a future in which billions of people will use personal AI agents operating 24/7 to improve their personal lives and careers, although he said Meta has not yet made it a reality.

Wall Street’s patience is wearing thin. Thomas Monteiro, senior analyst at Investing.com, said in a note that Meta’s advertising revenue, which is still growing at a healthy pace, will not offset all of the AI ​​spending.

“The harder truth is that even strong announcements are not enough considering the spending outlook,” he wrote.

It’s still too early to rule out Meta. On the earnings call, Zuckerberg emphasized that he didn’t see Meta as just an advertising business. He cited Meta’s long history of building its own technology, from creating Facebook in its Harvard dorm room to building data centers today.

“We really are a complete technology company,” he said.

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