Meta Platforms Inc.’s CEO, Mark Zuckerberg, is pointing to the current success of the company as evidence that the massive investment in artificial intelligence is paying off. Following a strong second-quarter earnings report, Zuckerberg emphasized the role of AI in accelerating Meta’s growth in the digital advertising sector, Meta’s primary business.
The company saw a revenue surge of 22% year-over-year to $39.07 billion, with advertising accounting for 98% of sales, primarily from Facebook and Instagram. This growth rate outpaced Google’s ad business, which reported an 11% increase in sales to $64.6 billion.
Smaller platforms like Pinterest and Spotify also reported revenue growth, albeit at lower rates compared to Meta. Meta’s finance chief, Susan Li, attributed the strong performance of the advertising business to sectors like online commerce, gaming, entertainment, and especially the Asia-Pacific region.
Despite challenges like Apple’s iOS privacy update impacting ad targeting, Zuckerberg highlighted AI as the cornerstone of Meta’s revamped online advertising platform. Industry experts, like Mark Mahaney from Evercore ISI, have observed a tangible impact on revenue and profits from Meta’s utilization of AI.
While Meta’s shares jumped 7% in after-hours trading post the earnings report, the company continues to make substantial investments in AI infrastructure, aligning with the broader tech industry’s focus on AI-driven advancements.
‘Realized Returns Already’
Analysts like Angelo Zino from CFRA Research acknowledge Meta’s adept integration of AI across its ecosystem, noting that the company’s growth rates outperform its peers. Meta’s forward-looking strategy includes significant CapEx growth in support of AI research and product development efforts.
Meta’s CFO, Susan Li, delineated the dual impact of AI strategy – where core AI enhances the advertising platform and recommendation systems for improved engagement and ad performance, leading to revenue gains. On the other hand, the long-term vision involves generative AI products that may not be immediate revenue drivers, but hold promise for unlocking new revenue streams over time.
Li emphasized that the company’s AI initiatives are aimed at creating sustainable returns on these substantial investments over the coming years, aligning with Meta’s continued commitment to innovation and growth.
View: Meta transitioning towards Ambient Computing
