A Meta sign is seen at the headquarters of Meta Platforms Inc., formerly named Facebook, Inc., in Menlo Park, California, USA, 8 November 2022. (Photo: EPA-EFE/JOHN G. MABANGLO) That progress, which sent the social media company’s shares up in late trading Wednesday, will buy time for Chief Executive Officer Mark Zuckerberg to invest in more future-looking products. Addressing investors and analysts, he spent most of his time expounding on Meta’s push into large language models that will power AI chatbots and praising the company’s AI smart glasses and virtual reality headsets.
“There are all the jokes about how all the tech CEOs get on these earnings calls and just talk about AI the whole time,” he said on Wednesday. “It’s because it’s actually super exciting and it’s going to change all these different things over multiple time horizons.”
Zuckerberg said that AI will “end up affecting almost every product that we have in some way”.
In the more immediate term, Meta has been using AI to improve the way advertisements find interested users, adding efficiency to its most lucrative business. The company is using algorithms to better determine when and where to show ads, and is also starting to roll out generative AI features so that marketers with small budgets can create more interesting promotions.
Meta had 3.27 billion users across all of its apps as of June 30, an increase of 7% from the prior year.
The Facebook and Instagram parent company reported sales of $39.1-billion for the quarter ended 30 June, compared with analysts’ estimates of $38.3-billion, according to data compiled by Bloomberg. Meta expects sales for the current quarter of $38.5-billion to $41-billion, compared with the average projection for $39.2-billion.
Meta shares jumped about 5% in late trading.
Meta has been spending heavily on data centres and computing power, as Zuckerberg works to build a leading position in the industry-wide AI race. Meta tweaked its full-year projections for capital expenditures, setting a new forecast of $37-billion to $40-billion, raising the low end of an earlier range by $2-billion.
The company is investing in large language models, the technology that underpins AI chatbots. Meta recently unveiled its largest model to date, which Zuckerberg said cost hundreds of millions of dollars in computing power to train. It has also spent heavily on other long-term projects, including AI-powered smartglasses, and a series of virtual worlds known as the metaverse. Reality Labs, the division within Meta that is tasked with building all of these futuristic technologies, reported a loss of nearly $4.5 billion in the quarter.
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Balancing investment with the more immediate need for financial returns has been a challenge at times for Meta. Zuckerberg’s moves that have helped support the stock’s performance — job cuts, a $50-billion share buyback programme, and Meta’s first-ever quarterly dividend — come as he has remained clear that the company’s spending will keep going up. The company said in a release on Wednesday that it plans to increase capital expenditures “significantly”.
“While we continue to refine our plans for next year, we currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts,” Meta said.
There are some early signs that the AI-focused products are gaining popularity, though not necessarily contributing to the company’s bottom line. Zuckerberg said that Meta’s chatbot, Meta AI, is on pace to become the most widely used AI assistant in the world by the end of the year. Eventually, he believes that every business will need one — if not multiple — AI-powered chatbots to handle customer service queries and interactions, he added on Wednesday.
Demand for Meta’s smart glasses, which are built via a partnership with EssilorLuxottica’s Ray-Ban, is outpacing the company’s ability to build them, Zuckerberg said.
Zuckerberg said in April that “smart investors” would see the long-term promises of artificial intelligence and metaverse technology, even if the financial returns are years away. Earlier this month, he told Bloomberg investing too much would be better than investing too little.
Watch: Inside Mark Zuckerberg’s AI Era (Video)
“I think that there’s a meaningful chance that a lot of the companies are over-building now, and that you’ll look back and you’re like, ‘oh, we maybe all spent some number of billions of dollars more than we had to,’” Zuckerberg said. “On the flip side, I actually think all the companies that are investing are making a rational decision, because the downside of being behind is that you’re out of position for the most important technology for the next 10 to 15 years.”
Meta shares, which closed at $474.83 in New York, rose in extended trading following the results. The stock has risen 34% so far this year.