Facebook-owner Meta announced a substantial increase in quarterly profits, yet concerns over the mounting costs of artificial intelligence (AI) led to a dip in its share price on Wall Street.
During the January to March period, Meta's net profit surged to $12.4 billion, accompanied by a remarkable 27% rise in total revenue, primarily driven by advertising sales, reaching $36.5 billion.
Mark Zuckerberg, CEO of Meta, highlighted the company's expansive user base, estimating that over 3.2 billion people engage with Meta's apps daily, with notable growth observed in the US market.
Analysts attribute Meta's growth to its sophisticated advertising tools and the success of "Reels," algorithm-driven short videos akin to TikTok.
Meta's potential revenue stream expansion includes plans to introduce advertising on Threads, a text messaging platform akin to Twitter's X, expected to provide advertisers with real-time engagement opportunities.
Despite a successful rebound in 2023, Meta's shares faced a setback, dropping nearly 17% in after-hours trading, as investors expressed apprehension over rising expenditures, particularly in AI development.
With investments in AI escalating, Meta projects a substantial increase in capital expenditures for 2024, signaling a strategic shift towards AI integration across its platforms.
Zuckerberg urged investors to exercise patience, acknowledging the prolonged timeframe for AI development, which he anticipates will take "several years" to establish Meta as a leading AI entity.
The latest iteration of Meta AI, powered by LLaMA 3, is being rolled out across Meta's apps, aiming to enhance user experience and engagement. However, the escalating costs of AI deployment raise concerns amid fierce competition with tech giants like Microsoft.
While Meta remains optimistic about the metaverse, its dedicated branch incurred substantial losses, albeit lower than anticipated. Zuckerberg affirmed confidence in the partnership with Ray-Ban for VR glasses and reiterated the metaverse's significance for the future of the internet.
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