Facebook and Instagram’s owner beat Wall Street estimates for sales on Wednesday night, as it sought investors’ concerns about the billions it spends on artificial intelligence.
Meta Platforms’ revenue in the second quarter, which is the world’s biggest social media company, grew by 22 percent to $39.07 Billion in the three-month period ending in June, exceeding analyst expectations of $38.34 Billion.
Mark Zuckerberg, Meta’s founder and CEO, stated that “we had a very strong quarter.”
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Meta shares and other technology stocks saw a strong rebound during normal trading hours. This was led by Nvidia the chip maker, which saw its stock value increase $329 billion after gaining 12.8% on the day, to $117.02. After-hours, Meta shares rose 3.7 percent, or $17.17 to $491.02, as investors reacted positively to signs that investments in artificial intelligence are helping Meta’s targeted advertising sales.
The net income for the third quarter increased by 73 percent to $13.47 Billion.
Investors are increasingly concerned about the return on investment of Meta’s investments into artificial Intelligence and “metaverse”, despite the high spending.
Meta predicted capital expenditures of $35 billion to $40 billion in April. The company is investing money into the development of data centres and technology required for training AI models. Meta announced on Wednesday that it expects full-year capital expenditures of between $37 and $40 billion.
Meta said that AI is driving growth through improved social media advertising targeting. It has added an AI assistant to WhatsApp in order to help connect businesses with their clients and to sell goods and services.
In a speech to Wall Street on Tuesday, Zuckerberg stated: “At this point, the results we are seeing with our core products and businesses give us the chance to make significant investments for the future.”
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Zuckerberg stated that AI drives engagement on Facebook and Instagram through improved recommendations. He said that AI will allow advertisers in the future to “tell us their business objectives and budget, and we’ll do the rest”, without them having to predict which customers would be interested in products or services. He said that “we’ll get there incrementally, but this will be a big deal”.
He explained that Meta AI allows users to role-play difficult situations or search for information before they have them with someone else. Users can create “imagine yourself”, a new feature that allows them to “do whatever they want, in any style they want”. Meta will also expand its “business AI” offering, according to Zuckerberg.
He said: “I think in the future every business will also have an agent with whom their customers can interact.” Our goal is to make small businesses’ lives easier.
Susan Li, Chief Financial Officer, said that: “We do not expect our gen [generative] AI to be a significant driver of revenue by 2024, but we expect them to open new revenue opportunities with time.”
Meta, according to Meta’s CEO, plans on “significantly increasing” its AI infrastructure investment next year.
Meta was founded in Menlo Park in California in 2004. Meta changed its name two years ago from Facebook in order to reflect the company’s focus on metaverses, which it considers to be “the next frontier of online connectivity” after social networks. At the end of June, there were 3.27 billion active users in its apps.
Max Willens is a technology analyst for eMarketer. He said that the results of this quarter should allay any fears investors had regarding Meta’s investment in AI and metaverse. Meta’s introduction of Reels ads has resulted in a perfect storm, with both rising impressions as well as rising ad rates.
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