Meta has announced a significant increase in its planned investments in artificial intelligence (AI), positioning itself to compete aggressively in the burgeoning AI arms race with major players like Microsoft and Google.
During an earnings conference call on 24 April, CEO Mark Zuckerberg revealed that the company’s capital expenditure for 2024 is set to rise to between USD 35 billion and USD 40 billion, up from the previously forecasted USD 30 to USD 37 billion. This increase is primarily aimed at enhancing the company's infrastructure to support extensive AI research and product development.
Zuckerberg's remarks came as Meta reported that such aggressive investments are part of a broader strategy that aligns with its past approaches to scaling new products, such as Reels and Stories, before they begin generating revenue. The CEO stressed the historical success of this strategy, noting that it has typically led to significant long-term benefits for both the company and its investors. He expressed confidence in the monetisation potential of AI technologies, hinting at future revenue streams from advertising, selling access to larger AI models, and other AI-enhanced services.
Despite these optimistic projections, the immediate response from the market was less than favorable. Meta's shares fell by as much as 15 per cent in extended trading, a decline that was exacerbated by weaker than expected revenue guidance for the second quarter of the year. However, Zuckerberg reassured investors of the soundness of Meta's investment approach, emphasizing the eventual profitability of these ventures.
The earnings call also touched on Meta's recent unveiling of a new AI chatbot powered by its latest language model, Llama 3, which is integrated across its various apps and devices. Zuckerberg highlighted the rapid adoption of the chatbot, with tens of millions of users in English-speaking countries, demonstrating Meta's capability to lead in AI technology.
Additionally, Zuckerberg discussed the integration of Meta's AI advancements with its Reality Labs segment, which is focused on developing next-generation computing platforms like smart glasses. These smart glasses are equipped with AI assistants that enhance user interactions by providing contextually aware assistance.
Meta reported a 27 per cent increase in overall revenue to USD 36.5 billion for the quarter, with daily active users across its apps growing by 7 per cent year-over-year. Despite reporting a steep operating loss in its Reality Labs segment, the company's net profit more than doubled from the same quarter last year, pointing to robust underlying financial health.
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