Meta continues to invest heavily in artificial intelligence infrastructure, such as data centers and GPUs, as its CEO Mark Zuckerberg advised investors of a potential long-term horizon before realizing profits from these investments. Despite increased expenses related to A.I., Meta’s core advertising business shows robust growth, and the company remains optimistic about its future A.I. prospects. New products and features in the A.I. segment aim to enhance the core business and drive new revenue streams. Additionally, Meta’s latest smart glasses have exceeded expectations in recent sales.
In a previous announcement, Meta launched several A.I.-driven applications and products that aimed to compete with similar offerings from tech giants like Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Amazon. Despite initial enthusiasm, some products, such as A.I. celebrity chatbots, were quietly discontinued due to low user engagement. This mixed performance contrasts with the current positive reception of the Ray-Ban Smart Glasses, suggesting that while some initiatives may falter, others can find success.
Currently, Meta reported a 7% year-over-year increase in total costs for the April-June quarter, largely driven by A.I. expenditures. Mark Zuckerberg highlighted to analysts the lengthy time frame expected for its A.I. ventures to become profitable. The company’s core advertising division showed resilience, reporting $39 billion in revenue for the quarter, representing a 22% growth from the previous year, and beating Wall Street’s predictions. Quarterly profits surged by 73% to $14.47 billion, leading to a 6% rise in Meta’s shares following the earnings announcement.
Future of A.I. at Meta
“We don’t expect our [generative] A.I. products to be a meaningful driver of revenue in 2024,”
stated Susan Li, Meta’s CFO. However, she expressed confidence that these products will eventually open up new revenue opportunities. Meta has introduced various A.I. initiatives, such as Llama 3.1 and AI Studio, aiming to keep pace with other big tech players in the generative A.I. space. Despite not yet monetizing these products, the company remains optimistic about future returns.
Ray-Ban Smart Glasses Outperform
The Ray-Ban Smart Glasses, which incorporate Meta’s A.I. assistants, have performed well, with sales outpacing the original version within a few months. This marks a significant achievement for Meta’s hardware segment, which Zuckerberg described as a “very positive surprise.” The success of the glasses contrasts with other A.I. ventures that have seen limited engagement.
Looking forward, Meta projects that its A.I. infrastructure costs will range between $37 to $40 billion by the end of 2024, surpassing initial estimates. These expenses are expected to extend into 2025, reflecting the company’s commitment to supporting its A.I. research and product development. The company is also exploring ways to leverage generative A.I. to enhance its core advertising business and developing A.I. agents to assist businesses in driving sales and reducing costs. Zuckerberg expressed strong belief in the potential of these initiatives.
Meta’s proactive steps in AI and their substantial investment into this sector highlight the company’s strategic focus on future growth. While some products may not immediately contribute significantly to revenue, the long-term vision appears to be well-aligned with broader industry trends. Investors and stakeholders are advised to keep an eye on Meta’s evolving A.I. landscape and its impact on the company’s overall business model.
