META Platforms reported better-than-expected sales for the second quarter, offering evidence that the company’s heavy investments in artificial intelligence (AI) are helping it sell more targeted and personalised advertisements.
Shares jumped in late trading.
The Facebook and Instagram parent company reported sales of US$39.1 billion for the quarter ended Jun 30, compared with analysts’ estimates of US$38.3 billion, according to data compiled by Bloomberg.
The company said it has been using AI to improve the way advertisements find interested users, adding efficiency to its most lucrative business. Meta expects sales for the current quarter of US$38.5 billion to US$41 billion, compared with the average projection for US$39.2 billion.
Meta has meanwhile been spending heavily on data centres and computing power, as chief executive officer Mark 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 range from US$37 billion to US$40 billion, raising the low end of the range by US$2 billion.
The company is investing in large language models, the technology that underpins AI chatbots. The company recently unveiled its largest model to date, which Zuckerberg said cost hundreds of millions of US dollars in computing power to train. Investors have been looking for signs of a positive impact on the business from all the spending, especially after Meta poured billions into another Zuckerberg passion project – a series of virtual worlds known as the metaverse – without generating much return.
In a press release on Wednesday (Jul 31), Zuckerberg said that Meta’s chatbot, Meta AI, is on pace to become the most widely used chatbot in the world by the end of the year. Still, Zuckerberg has preached patience with investors, and said in April that “smart investors” would see the long-term promises of this technology, even if the financial returns are years away.
“I think that there’s a meaningful chance that a lot of the companies are over-building now, and that you will look back and you are like, ‘oh, we maybe all spent some number of billions of US dollars more than we had to,’” Zuckerberg told Bloomberg earlier this month. “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 are out of position for like the most important technology for the next 10 to 15 years.”
Meta had 3.3 billion users across all of its apps as at Jun 30, an increase of 7 per cent from the prior year. BLOOMBERG
