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Home » How Meta Is Using AI to Drive Immediate Business Gains
Money & Finance

How Meta Is Using AI to Drive Immediate Business Gains

adminBy adminAugust 30, 20240 ViewsNo Comments3 Mins Read
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Although Meta is pursuing the same AI technology gains as its rivals, analysts say it’s doing a better job explaining why AI matters to its bottom line — with Meta’s AI-driven growth in revenue boosting investor confidence and driving its stock up.

Meta has raced ahead of Big Tech peers like Google parent Alphabet, Apple and Microsoft in year-to-date stock gain, growing over 53% year-to-date at the time of writing, compared to about 20% for Alphabet, 22% for Apple and 12% for Microsoft.

Meta also reported sales of $39.1 billion for the quarter that ended June 30, which was above analyst estimates of $38.3 billion. In contrast, second-quarter earnings reports from Meta competitors like Amazon, Microsoft and Alphabet fell short of Wall Street expectations. Investors wanted to see multi-billion-dollar AI bets pay off, with sales growth to balance spending.

Analysts told Bloomberg on Thursday that Meta CEO Mark Zuckerberg sold the benefits of AI better than other Big Tech CEOs on a recent earnings call in July. Meta’s key to tying AI to revenue was a clear impact area: AI helped grow Meta’s advertising business, which made up 98% of the company’s revenue last quarter.

Related: Nvidia CEO Jensen Huang Calls Mark Zuckerberg’s Vision for the Future of AI a ‘Home Run Idea’

“[Meta] has arguably articulated its vision of AI integration more clearly than its competitors,” investment strategist Andrew Ye told Bloomberg.

Almost all of Meta’s millions of advertisers use at least one of Meta’s AI-driven ad tools. AI-fueled content recommendations also keep users’ attention for longer, increasing ad revenue.

“Across Facebook and Instagram, advances in AI continue to improve the quality of recommendations and drive engagement,” Zuckerberg said on the earnings call, per the transcript.

Related: Mark Zuckerberg Says Apple’s ‘Constrained’ Platform Is the ‘Major Reason’ He’s Pushing for Open Source AI

Zuckerberg said that AI will be used “in the coming years” to create personalized content for advertisers. Meta is working towards a future where advertisers will only have to know their business goals and budget, and Meta will handle the rest with the help of AI.

Meta CEO Mark Zuckerberg. Photographer: SeongJoon Cho/Bloomberg via Getty Images

In 2025 and 2026, Zuckerberg sees AI driving revenue by continuing to strengthen existing products, like content recommendations and advertising.

“I do think that part of what’s so fundamental about AI is it’s going to end up affecting almost every product that we have in some way,” he said on the call.

Building AI infrastructure is costly, with one AI model costing upwards of $100 million to develop. Zuckerberg has disclosed that Meta’s largest AI model to date, released in July, cost hundreds of millions of dollars to develop.

Related: New Google Report Reveals the Hidden Cost of AI

Read the full article here

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