Meta's recently released financial report shows that its AI investments are bringing strong momentum. Although the stock price fell in after-hours trading, both revenue and earnings exceeded expectations. The editor of Downcodes will conduct a detailed interpretation of Meta's financial report, analyze its investment strategy and future development direction in the field of AI, and discuss the challenges it faces in the fields of virtual reality and augmented reality.
At a recent earnings conference, Meta CEO Mark Zuckerberg said that the company’s artificial intelligence (AI) investment is showing “strong momentum.”
Although Meta's quarterly revenue and earnings exceeded Wall Street expectations, Zuckerberg expects the company's AI spending to increase further next year. While Meta's stock has risen more than 70% in 2024, hitting new highs, the stock price fell about 3% in after-hours trading following the earnings release.
In its earnings report, Meta reported a 19% increase in third-quarter revenue to $40.6 billion, almost in line with Wall Street expectations. Net profit also rose sharply by 35% to US$15.7 billion, far exceeding analysts' forecasts of US$13.6 billion. In addition, the number of daily active users of Meta's social applications increased by 5% to 3.3 billion.
Zuckerberg mentioned in the analyst conference call that with the advancement of new AI technology, he sees many new opportunities to accelerate the company's core business, which is expected to bring good returns on investment in the next few years.
He said that the platform's AI-driven content recommendation function has increased user time on Facebook and Instagram by 8% and 6% respectively. He also mentioned that new content categories may be added to these platforms in the future, including content generated by AI or summarized by AI, saying that relevant tests are currently underway.
Zuckerberg also introduced the growing user acceptance of Meta's AI chatbot Meta AI, and the increasing application of large-scale language model Llama among enterprises and developers. The scale of Llama's training makes it a leader in the industry.
However, Meta's Reality Labs in the field of virtual reality and augmented reality still faces challenges. In the third quarter, revenue was only US$270 million and operating losses were as high as US$4.4 billion. Zuckerberg also admitted that Reality Labs’ annual operating losses are expected to increase significantly. The company also revealed that it is restructuring its teams across WhatsApp, Instagram and Reality Labs, laying off some employees and relocating others.
Meta’s Chief Financial Officer Susan Lee said that the company will further increase its investment in Reality Labs, infrastructure and generative AI, prioritizing these areas. She also mentioned that fourth-quarter sales are expected to be between $45 billion and $48 billion. Meta raised its full-year capital spending forecast to $38 billion to $40 billion and expected a significant increase in infrastructure spending.
All in all, Meta's active layout and continuous investment in the field of AI demonstrate its confidence in future development, but Reality Labs' losses also remind it of the challenges it faces on the road to diversified development. Whether Meta can balance its investment in the AI field with the development of other businesses in the future will be the key to its ability to continue to maintain its leading position.