Meta Shows Strong Growth as AI Spending Surges

AFP/APP

San Francisco: Meta, the parent company of Facebook, Instagram, and WhatsApp, reported a strong third quarter, with net income and revenues exceeding expectations as it announced increased investments in artificial intelligence.

Meta’s net profit rose 35 percent from the same period last year to $15.7 billion, while revenue grew by 19 percent to $40.6 billion, slightly above analyst predictions.

Despite this, Meta shares fell in after-hours trading due to investor concerns over projected AI spending and ongoing losses at its virtual and augmented reality division, Reality Labs.

“We had a good quarter driven by AI progress across our apps and business,” said Meta’s founder and CEO Mark Zuckerberg.

In recent months, Zuckerberg has prioritized AI innovations, including chatbots and ad tech upgrades, across Meta’s platforms. Meta raised its 2024 capital investment forecast to $38-40 billion, with a substantial portion directed towards AI.

While Meta’s revenue growth helped alleviate investor concerns regarding AI spending, Debra Aho Williamson of Sonata Insights noted, “the full impact of these features won’t be felt until 2025 or beyond.”

The company recently revealed its experimental Orion augmented reality glasses and Ray-Ban Meta smart glasses, which analysts predict could perform well during the holiday season.

Despite enthusiasm for these products, Reality Labs reported $270 million in revenue against $4.4 billion in operating losses, continuing to weigh on investor sentiment.

Meta’s share price dropped over two percent following the earnings report as traders assessed the results.