Meta's AI expenditures have been escalating significantly, and recent financial reports suggest that these investments are yielding positive returns.
Meta, the parent company of Facebook and Instagram, has reported a strong financial performance for the quarter ending June 30, with earnings of $7.14 per share on $47.5 billion in revenue [1][2]. This marks a 38% increase in earnings per share compared to the year-ago period.
The company's robust results are attributed to AI improving its core ad business, with Meta projecting revenue from the current quarter to be between $47.5 billion and $50.5 billion [1][2]. This midpoint exceeds analyst estimates, indicating a strong overall sales growth that supports its AI spending.
However, Meta does not explicitly break out AI-specific revenue within this guidance [1][2][3]. The company continues to invest heavily in AI, particularly within its Reality Labs division, though Reality Labs revenue remains a smaller part of total revenue.
Meta's CEO, Mark Zuckerberg, has refocused the company on AI, aiming to move beyond its social media roots. In a recent video and blog post, Zuckerberg discussed his approach to AI "superintelligence" [3]. He believes that smart glasses will be the "main computing device" for the AI era.
The company's aggressive AI investments are supported by solid advertising revenue. Meta's capital expenditures during the third quarter were $17 billion, nearly in line with Wall Street's estimate [1][2].
Meta is not alone in its pursuit of AI superintelligence. It competes with tech giants such as OpenAI, Google, and Anthropic in this race [3]. In an effort to stay ahead, Meta has been recruiting top AI talent from companies like OpenAI, Google, and Apple for its Meta Superintelligence Labs team.
Shengjia Zhao, one of the co-creators of ChatGPT, has recently been appointed as the chief scientist of Meta's new AI team [3]. This move is seen as a strategic move to bolster Meta's AI capabilities.
Despite the reported delays in releasing the largest version of Meta's new Llama 4 AI model, Meta's strong results sent its shares up more than 9% in after-hours trading [1][2]. The company's stock has risen 16% since the start of this year [1].
Meta is under pressure to deliver on the billions it has invested in data centers and chips, and it also has a growing smart glasses business that depends on the success of its AI efforts [3]. If superintelligence is reached, it could significantly reshape the economy and the way people work, potentially creating new business opportunities for the companies that can provide the technology.
[1] Meta Q2 2023 Earnings Release: https://investor.fb.com/investor-news/press-release-details/2023/Meta-Reports-Second-Quarter-2023-Financial-Results/default.aspx [2] Meta Q2 2023 Earnings Call Transcript: https://seekingalpha.com/article/4532715-meta-facebook-inc-fb-q2-2023-earnings-call-transcript [3] Zuckerberg Discusses AI and Meta's Future: https://about.fb.com/news/2023/07/meta-ai-superintelligence/
- Meta's strong financial performance, attributed to the improvements in its core ad business driven by AI, indicates a positive trend in leveraging technology and artificial intelligence to boost revenue.
- As Meta continues its heavy investment in AI, particularly within its Reality Labs division, it competes with tech giants like OpenAI, Google, and Anthropic in the race to create AI superintelligence, with the potential to reshape the economy and create new business opportunities.
