On Wednesday, Meta Platforms Inc (META.O) CEO Mark Zuckerberg said AI was helping the business increase traffic to Facebook and Instagram and ad revenues, forecasting quarterly revenue far beyond analyst projections.
Meta shares rose 12% in after-hours trading, increasing $50 billion to its market value and extending a tech stock boom that began after Google parent Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) reported solid results on Tuesday.
Meta reduced its cost prediction range for the year, indicating spending might be less than the March forecast, and topped forecasts for first-quarter earnings and sales, which climbed for the first time in over a year.
The company has invested heavily in its core business, including a huge AI capacity boost.
“At this point, we are no longer behind in building our AI infrastructure,” Zuckerberg remarked on a conference call. “And to the contrary, we now can do leading work in this space at scale.”
Meta said AI suggestions boosted Instagram time by 24% in January-March.
“I think similar to Alphabet, a lot of Meta’s AI investments have gone into the advertiser side,” said Atlantic Equities analyst James Cordwell.
“So as consumers we’re maybe not seeing the fruits of their labor in that area, but it certainly seems as if they are able to use more advanced algorithms to maintain a certain level of ad targeting.”
Meta is also reducing 21,000 workers and flattening its middle management to meet Zuckerberg’s “year of efficiency” objective of 2023.
The austerity push was “off to a stronger than expected start for Meta,” according to Insider Intelligence lead analyst Debra Aho Williamson.
“In this economic environment—and after 2022—3% year over year sales increase is an accomplishment. Meta’s strong Q2 revenue projection suggests the firm may be turning a corner.”
The social network company struggled in 2022 as a pandemic-era e-commerce boom stalled, rivals like TikTok stole youthful users, and Apple Inc.’s (AAPL.O) privacy changes curtailed access to user data it built its advertisements business.
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