-- Shares of Meta Platforms Inc (NASDAQ:) fell sharply in aftermarket trade on Wednesday after a disappointing outlook for second-quarter earnings vastly offset strong first-quarter earnings, with selling spilling over into other major technology stocks.

Meta’s shares slid 15.3% to $417.83- a near three-month low- after it forecast second-quarter revenue in the range of $36.5 billion to $39 billion, or $37.75 billion at the midpoint- lower than estimates of $38.3 billion. 

Losses in Meta’s stock spilled over into other major internet firms, given that they set a dour tone for upcoming earnings in the sector. Microsoft Corporation (NASDAQ:) fell 1.9% in aftermarket trade, while class-A shares of Google parent Alphabet Inc (NASDAQ:) sank 3%. Both firms are set to report their first-quarter earnings after the bell on Thursday. 

Losses in Meta and its peers saw slide more than 1% on Wednesday.

Meta’s weaker-than-expected outlook was fueled chiefly by expectations of increased costs, as the company ramps up its investment in artificial intelligence. Capital expenditures for 2024 are now expected between $35 billion and $40 billion, up from a prior range of $30 billion and $37 billion. 

The higher cost outlook largely offset stronger-than-expected first-quarter earnings from the Facebook owner.

Meta’s earnings are likely to set a precedent for other major internet firms, as they undertake increased costs to gain an edge in AI computing, which has shot up in popularity over the past year.

While majors such as Microsoft have already reaped higher earnings on the back of AI, costs have been steadily increasing, given the elevated computing requirements of AI programs. 

Still, Goldman Sachs maintained its buy rating on Meta, stating that while investors were expected to have an initial negative reaction to the weak outlook, there was still potential in AI, and that the stock has been a strong year-to-date performer in 2024.