Mark Zuckerberg warns of stock volatility as Meta bets billions on investing in artificial intelligence 'before we generate much revenue'

Prepare for disruption, and be patient. That was Mark Zuckerberg's message to Meta shareholders on Wednesday as he explained his decision to pour tens of billions of dollars into a multi-year spending spree on artificial intelligence that will precede any meaningful reward.

Co-founder and CEO of Meta, which owns Instagram, FacebookWhatsApp said he had recently become more optimistic about the company's prospects for dominating the highly competitive market for generative AI services, and that he concluded that “it makes sense to go further.”

Zuckerberg admitted during the company's first-quarter earnings call that this may not sit well with investors, and Meta shares fell more than 15% hours after he spoke. “We have historically seen a lot of volatility in our inventory during this phase of our product catalog as we invest and expand into a new product but have not yet monetized it.”

Meta said on Wednesday that capital expenditures to support its AI ambitions could total $40 billion this year, up to $5 billion more than it allocated in October. The company said costs will only rise in the coming years. “This will likely take several years,” he said.

But Zuckerberg also noted that “smart investors” will recognize the opportunity and be patient. After all, the company has been through this before, he said, pointing to investments in products like Reels and Stories that have since paid off.

The direct appeal to Wall Street for patience highlights the danger of an AI arms race to which Meta is committed. Microsoft It reportedly plans to spend up to $100 billion to build a dedicated AI data center with ChatGPT maker OpenAI. Alphabet, which owns Google, has been investing heavily in artificial intelligence for years.

while Google Microsoft and Microsoft both have cloud businesses that serve as ways to monetize their investments in AI, but Meta is not in the cloud business. But Zuckerberg hinted that charging for “computation” could be one way to generate revenue from its AI technology, alongside its traditional advertising business.

Zuckerberg attributed his growing confidence in Meta's AI prospects to the company's recently launched Llama 3 language model, and the consumer version of the technology from it, which is being called Meta AI in a few countries. Zuckerberg said tens of millions of people have already tried Meta AI, and the company plans to roll it out to more users in the coming months.

Meta doesn't generate any direct revenue when users interact with Meta AI at the moment, but Zuckerberg has repeatedly pointed to the company's track record of monetizing its products when they reach enough scale — but he hasn't said when that moment will come.

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“What we've shown now is that we have the ability to build leading models in our company, so I think it makes sense to move forward with that. And we will do that. I think it will be a good investment in the long term.”

This story originally appeared on Fortune.com