Meta Platforms reported better-than-expected sales for the second quarter, offering evidence that the company’s heavy investments in artificial intelligence are helping them sell more specific and personalized ads.
Shares rose in late trading. The parent company of Facebook and Instagram reported sales of $39.1 billion for the quarter ended June 30, compared with analyst estimates of $38.34 billion, according to data compiled by Bloomberg.
The company says it has been using artificial intelligence to improve the way ads find interested users, adding efficiency to your most lucrative business. Meta expects sales for the current quarter to be between $38.5 billion and $41 billion, compared with the average forecast of $39.2 billion.
Meanwhile, Meta has been investing heavily in data centers and computing power as CEO Mark Zuckerberg works to build a leadership position in the industry-wide AI race. Meta modified its full-year capital expenditure projections, establishing a new range of US$37 billion to US$40 billionraising the low end of the range to 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 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 invested billions in another of Zuckerberg’s passion projects (a series of virtual worlds known as the Metaverse) without generating much return.
In a press release published Wednesday, Zuckerberg said Meta’s chatbot, Meta AI, is on track to become the most used chatbot in the world by the end of the year. Still, Zuckerberg has urged patience from investors, saying in April that “smart investors” would see the long-term promise of the technology, even if financial benefits are years away.
“I think there is a significant possibility that many companies are overbuilding now, and that if we look back, we say:“Oh, maybe we all spent billions of dollars more than we had to,” Zuckerberg told Bloomberg earlier this month.
“On the other hand, I think all the companies that are investing are making a rational decision, because the disadvantage of staying behind is that you are not in a position to deal with the most important technology for the next 10 to 15 years.”
