Following the announcement, Meta’s shares increased by 12% in after-hours trading, bringing the company’s market worth to more than $50 billion. Meta, the parent company of Facebook, Instagram, and WhatsApp, revealed on Wednesday that it is making substantial success in its AI programs, which have contributed to increased traffic and ad sales on both social media platforms. AI, according to Meta CEO Mark Zuckerberg, is the main driver behind the company’s projected quarterly revenue, which is much higher than analyst projections.
This extends the recent surge in technology stocks, which began earlier this week with solid reports from Google parent Alphabet and Microsoft.
Meta has been hesitant to implement AI-friendly hardware and software systems for its core business, but the company has made multiple costly changes to strengthen its core business. The business’s AI capability has now been increased, and Mark Zuckerberg indicated that the company now has the capacity to perform leading work in this domain at scale. According to Meta, AI recommendations resulted in a 24% increase in time spent on Instagram during the January-March quarter.
According to analysts, Meta’s AI expenditures have primarily gone into the advertiser side, which is not visible to consumers, although powerful algorithms assist maintain a certain level of ad targeting. Meta has also launched a cost-cutting drive, with the goal of streamlining its operations by removing 21,000 jobs and flattening its middle-management hierarchy. The move is part of the company’s efforts to make 2023 the “year of efficiency,” as envisioned by Zuckerberg.
Meta’s investment in artificial intelligence has dramatically raised the company’s capital expenditures, which totaled $7.1 billion for the quarter, slightly less than analysts’ projections. However, Meta has not ruled out raising its capital expenditures as it develops solutions for generative AI, which may generate human-like writing, art, and other content. According to analysts, Mark Zuckerberg is aware of the criticism surrounding the company’s spending patterns and may face opposition if he attempts to move the funding towards untested areas.
The corporation has continued to pour money into its metaverse-focused Reality Labs unit, which lost $13.7 billion last year. Zuckerberg remarked that he is dedicated to the investments, and the business anticipates an increase in operational losses in the unit in 2023. Meta has lowered its estimated annual expenses to a range of $86 billion to $90 billion, which is lower than the previously reported range of $86 billion to $92 billion in March when the business announced its second round of layoffs.
