×
Written by
Published on
Written by
Published on
Join our daily newsletter for breaking news, product launches and deals, research breakdowns, and other industry-leading AI coverage
Join Now

Meta’s AI investments are already driving advertising growth, outpacing competitors like Google, Pinterest, and Spotify in the latest quarter. The company’s strong performance is evidence that its significant spending on artificial intelligence is paying off in the near term, not just in the distant future.

Advertising business boosted by AI: Meta’s advertising revenue grew 22% year-over-year, double the rate of Google’s ad business, with AI playing a key role in this success:

  • Meta rebuilt its ad tech stack using AI, improving ad performance and lifting overall ad prices despite slowing growth in the Asia-Pacific region.
  • AI-driven improvements to the user interface have generated more user engagement, contributing to the company’s strong advertising results.

Analysts recognize AI’s impact: Industry experts are acknowledging the positive effects of Meta’s AI investments on its current financial performance:

  • Mark Mahaney of Evercore ISI noted that Meta’s AI efforts are “showing up in the revenue and the profits now,” recommending investors buy Meta shares.
  • Angelo Zino from CFRA Research highlighted Meta’s successful integration of AI across its ecosystem, enabling the company to outpace its peers in terms of growth rates.

Continued investment in AI and the metaverse: Despite the near-term benefits, Meta plans to keep investing heavily in artificial intelligence and the metaverse:

  • The company expects significant capital expenditure growth in 2025 to support its AI research and product development efforts.
  • For 2024, Meta raised the lower end of its capital expenditure guidance range from $35 billion to $37 billion, with the upper end remaining at $40 billion.

A two-pronged AI strategy: Meta’s finance chief, Susan Li, outlined the company’s dual approach to AI:

  • “Core AI” focuses on improving Meta’s advertising platform and recommendation system, driving user engagement and advertising growth.
  • The company is also investing in AI for future products and initiatives, such as the metaverse, which continues to lose billions of dollars each quarter.

Broader implications: Meta’s strong advertising growth and the positive impact of its AI investments demonstrate the potential for artificial intelligence to drive business results in the near term. As other companies grapple with the costs and uncertain payoffs of AI, Meta’s performance suggests that well-targeted AI spending can yield tangible benefits. However, questions remain about the long-term sustainability of Meta’s AI-driven growth and whether its investments in the metaverse will ultimately prove fruitful.

Meta's advertising growth is proof that hefty AI spending is already paying off

Recent News

Tech giants are uniting in the name of more efficient and sustainable AI

The alliance expands to over 30 organizations, focusing on developing efficient and open AI inference solutions across five key industry sectors.

The race to block OpenAI’s web crawlers is slowing

OpenAI's licensing deals lead to fewer news sites blocking its web crawler, as publishers update their robots.txt files to allow access after forming partnerships.

Artist challenges copyright ruling on AI-generated prize winner

The controversy highlights the need for updated copyright laws to address the complexities of AI-assisted creative works.