Meta, the parent company of Facebook, Instagram and WhatsApp, announced on Wednesday that it is making significant progress in its AI initiatives, which have helped to increase traffic to both social media platforms and boost ad sales. CEO Mark Zuckerberg stated that AI is a key driver behind the company’s forecasted quarterly revenue, which is significantly higher than analyst expectations.
Following the announcement, Meta’s shares surged by 12 per cent in after-hours trading, adding more than $50 billion to the company’s market value. This continues the recent rally in tech shares, which began after strong results were posted by Google parent Alphabet and Microsoft earlier this week.
Meta has been slow to adopt AI-friendly hardware and software systems for its main business, but the company has undertaken several costly overhauls to bolster its core business. The company has now upgraded its AI capacity, and Zuckerberg stated that the company now has the capacity to do leading work in this space at scale. AI recommendations have resulted in a 24 per cent increase in time spent on Instagram during the January-March quarter, according to Meta.
Analysts believe that Meta’s AI investments have mainly gone into the advertiser side, which is not visible to the consumers, but advanced algorithms help maintain a certain level of ad targeting. Meta has also initiated a rigorous cost-cutting initiative, aiming to streamline its operations by eliminating 21,000 jobs and flattening its middle-management hierarchy. The move comes as part of the company’s efforts to achieve its objective of making 2023 the “year of efficiency,” as envisioned by Zuckerberg.
