Meta Platforms Inc. delivered a strong performance in the second quarter of 2024, with sales surpassing expectations, largely due to the company’s investments in artificial intelligence (AI). This development signals that Meta’s AI-driven ad targeting is yielding results, pushing its stock up by 10% in Thursday trading.
CEO Mark Zuckerberg, during a call with investors, highlighted Meta’s ongoing push into AI, noting that the technology is set to transform every aspect of the company’s operations. “AI is super exciting and will change all these different things over multiple time horizons,” he remarked, underscoring the pivotal role AI will play in Meta’s future.
Meta’s AI advancements are already enhancing the efficiency of its ad business, helping advertisers reach more relevant audiences. The company is also introducing generative AI tools, enabling marketers with limited budgets to craft compelling promotions.
Meta reported 3.27 billion users across Facebook, Instagram, and WhatsApp as of June 30, marking a 7% increase year-over-year. The company posted sales of $39.1 billion for the quarter, outpacing analyst estimates of $38.3 billion. For the upcoming quarter, Meta projects sales between $38.5 billion and $41 billion.
Zuckerberg’s focus on AI has led to a substantial increase in capital spending, now projected between $37 billion and $40 billion for the year. This includes significant investments in data centers and AI infrastructure, as well as advancements in AI-powered products like smart glasses and the metaverse.
Despite these heavy investments, Meta’s Reality Labs division reported a loss of nearly $4.5 billion for the quarter. Balancing these long-term bets with the immediate need for financial returns remains a challenge. However, Zuckerberg remains confident, stating that over-investing now is preferable to under-investing, especially in technologies poised to dominate the next decade.
Zuckerberg also pointed out that while some investors may be growing impatient with the pace of AI monetization, he believes in the long-term potential of these technologies. Meta’s AI chatbot, for instance, is on track to become the world’s most widely used AI assistant by year-end.
Meta’s earnings report comes at a time when other tech giants, like Microsoft and Alphabet, are also grappling with the high costs of AI investment. Zuckerberg’s strategy is clear: stay ahead in the AI race, even if it means spending more in the short term. He emphasized that being behind in this area could leave companies out of position for the most critical technology shift in the next 10 to 15 years.
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