Meta earnings call: Never mind the ad beat, here's the AI future (and present)
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Meta Platforms (NASDAQ:META) had nervous investors breathing easier Wednesday, with its stock jumping by double digits after a stronger-than-expected earnings report even after the company shed thousands of workers following a winter purge.
Meta stock was up by 12% entering its earnings conference call, following encouraging figures from the company's advertising business. As in Alphabet's conference call, though, Meta CEO Mark Zuckerberg spent his early comments focused on the topic of the day: artificial intelligence.
"Our AI work comes in two main areas," Zuckerberg said. "First, the massive recommendations and ranking infrastructure that powers all of our products from Feed to [short-video product] Reels to our ad system to our integrity systems, and that we've been working on for many, many years. And second, the new generative foundation models that are enabling entirely new classes of products and experiences."
That AI backdrop has driven a lot of the results seen today, he said. "Now more than 20% of content in your Facebook and Instagram feeds are recommended by AI from people, groups, or accounts that you don't follow. Across all of Instagram, that's about 40% of the content that you see."
AI work is also improving monetization, he said: Reels monetization efficiency is up over 30% on Instagram and over 40% on Facebook, quarter-over-quarter.
After some heavy capital expenditures over the past couple of years, "we are no longer behind in building out our AI infrastructure," Zuckerberg said. "To the contrary, we now have the capacity to do leading work in this space at scale."
Don't think he's forgotten the metaverse, though: "A narrative has developed that we're stuck on moving away from focusing on the metaverse vision. So I just want to say up front that that's not accurate. We've been focusing on both AI and the metaverse for years now, and we will continue to focus on both."
Building out the metaverse is a long-term project, but its rationale remains the same, he said -- and it's intimately connected with the company's AI work. "A breakthrough in computer vision was what enabled us to ship the first stand-alone [virtual reality] device."
Zuckerberg also spoke to the thousands of layoffs the company launched as it pursued a "year of efficiency" in 2023.
"When we started this work last year, our business wasn't performing as well as I wanted, but now we're increasingly doing this work from a position of strength," Zuckerberg said.
"Even as our financial position improves, I continue to believe that slowing hiring, flattening our management structure, increasing the percent of our company that is technical, and more rigorously prioritizing projects will improve the speed and quality of our work," he added.
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