Mark Zuckerbergthe CEO of Meta, said on Wednesday that thanks to artificial intelligence, the company has managed to increase traffic on Facebook and Instagram. Using AI, the company has been able to drive higher profits from ad sales, beating analyst forecasts for quarterly revenue. Something that makes the company’s shares grow, after a rather difficult period from an economic point of view for Meta.
Facebook and Instagram: with artificial intelligence Meta is growing again
Meta shares recorded a 12% increase in trading after the market closed, bringing its market value to over $50 billion. A bull run in tech stocks began after Alpha, the parent company of Google, and Microsoft announced strong results on Tuesday.
Meta narrowed the gap on cost forecasts for the year, saying expenses could be lower than the company forecast in March — possibly due to cuts to projects and staffing. But Meta has also beat estimates for first-quarter profit and revenuewhich have grown for the first time in almost a year.
The company – compared to others such as Microsoft – has lagged behind in implementing AI-enabled hardware and software systems for its core businessAnd. But in the last period it has done several expensive overhauls to strengthen its core business, including a huge project to enhance the capacity of the AI.
“We are no longer behind in building our AI infrastructure,” Zuckerberg said on a conference call. “And indeed, we now have the ability to make a cutting-edge work in this field on a large scale”.
With AI, the time spent on social media increases
According to reports from Zuckerberg, the suggestions of artificial intelligence have increased time spent on Instagram by 24% in the January-March quarter.
Perhaps those who hang out on Meta’s social media haven’t noticed so many differences on the platforms in the last period. Analysts, however, explain that the main differences in the use of artificial intelligence on Instagram and Facebook pertain to advertisers. Those who pay for advertising on social media are in fact using tools that allow them to find the right audience. And we, in return, can find suggestions that are closer to our tastes and needs.
But given the company’s great success on the market by announcing the news regarding AI, perhaps soon we could see some advanced features also on the user side.
Aggressive cost cuts, now Meta returns to growth on the stock exchange
Meta has launched a cost reduction campaign very aggressive. Indeed, she has decided to cut 21,000 jobs and streamline its middle management structure. Zuckerberg has already announced that he wants to make 2023 the “year of efficiency”.
Analysts estimated that the company’s cuts played an important role in raising the company’s share value. But after a decidedly subdued 2022, the 3% year-over-year revenue growth it represents a positive signal that the markets have listened to
The social media giant had to deal with a difficult 2022 when the e-commerce growth bubble burst in the era of the pandemicto. All this while competitors like TikTok have attracted younger users and the privacy updates of Apple have restricted access to user data on which its advertising activity is based. But now Meta seems to be doing better, at least compared to last year.
Instagram and Facebook, spending on artificial intelligence pays off
Spending on AI boost boosted company capital expenditures, which came in slightly below forecasts at $7.1 billion for the quarter. Analysts had expected $7.2 billion in capital expenditures in the quarter. So the company cut back to keep spending down, but invested heavily in AI.
But now he wants to do even more in this field. In fact, Meta has left open the possibility of increasing capital expenditures to develop products for generative AI. An emerging technology capable of producing writing, art and other human-like content that other social networks have already implemented, such as LinkedIn.
Now that Zuckerberg has seen that cutting costs to focus on artificial intelligence has paid off, both in traffic growth on Instagram and Meta and in the stock performance, we expect Meta to continue on this path. That unlike investing in the metaverse, it can bring immediate economic returnswhile continuing to invest in the future. Generative AI is increasingly playing a vital role for technology companies. And Meta seems to want to continue investing in it.