Meta is leading the pack in harnessing AI technology to drive revenue growth, showcasing a clear understanding of how AI impacts its business. This has significantly boosted investor confidence, reflected in the company’s impressive stock performance.
Year-to-date, Meta has outperformed its Big Tech counterparts such as Google parent Alphabet, Apple, and Microsoft, with a stock gain of over 53% compared to about 20% for Alphabet, 22% for Apple, and 12% for Microsoft.
In addition, Meta exceeded analyst expectations by reporting $39.1 billion in sales for the quarter ending June 30. This success contrasts with Meta’s competitors like Amazon, Microsoft, and Alphabet, whose second-quarter earnings did not meet Wall Street projections. Investors were looking for substantial returns on multi-billion-dollar AI investments, with revenue growth balancing out expenditure.
Analysts noted that Meta CEO Mark Zuckerberg effectively conveyed the benefits of AI during a recent earnings call in July, tying AI advancements directly to revenue growth. AI played a key role in boosting Meta’s advertising business, which accounted for 98% of the company’s revenue in the last quarter.
“[Meta] has arguably articulated its vision of AI integration more clearly than its competitors,” said investment strategist Andrew Ye to Bloomberg.
Notably, nearly all of Meta’s advertisers utilize AI-powered advertising tools, while AI-driven content recommendations improve user engagement, ultimately increasing ad revenue.
Zuckerberg emphasized that AI will be utilized in the future to personalize content for advertisers, streamlining the advertising process. He envisions AI continuing to enhance existing products like content recommendations and advertising in the years ahead.
In the coming years, Zuckerberg foresees AI driving revenue growth through ongoing product enhancements, emphasizing the pervasive impact of AI across all Meta products.
While building AI infrastructure entails significant costs, with individual models costing upwards of $100 million to develop, Meta remains committed to investing in AI development. Zuckerberg disclosed that Meta’s latest AI model, released in July, incurred costs in the hundreds of millions of dollars.
