Meta Increases AI Investment Amidslowerthanexpected User Growth Shares Drop 3
Social media giant Meta announced its third-quarter financial report, with profits and revenue exceeding expectations. Net income increased by 35% to $15.7 billion, with EPS reaching $6.03. However, slower-than-expected growth in active users and continued large investments in AI infrastructure by Zuckerberg have made investors hesitant, causing Meta’s stock price to fall more than 3% after hours, although it is still up 68% year-to-date.
AI Boosts, Ad Revenue Shines
Meta’s third-quarter sales increased by 19% year-on-year, reaching $40.59 billion in revenue. 98% of the revenue comes from advertising, with advertising revenue growing by 18.7% this quarter to $39.9 billion, showing steady growth.
Meta’s founder and CEO, Zuckerberg, stated:
Under the drive of AI, our applications and business have made significant progress. We have strong momentum in the adoption of Meta AI, Llama, and AI glasses.
Metaverse Still in the Red
Zuckerberg’s beloved metaverse business still shows no improvement, with the Reality Labs division’s revenue growing by 29% in the third quarter, but still incurring a $4.4 billion loss.
The CFO stated that due to ongoing product development and further ecosystem expansion investments, operating losses in 2024 are expected to significantly increase compared to the same period last year.
Increased Capital Expenditure, Active Investments in AI
Meta expects full-year capital expenditures in 2024 to fall between $38-40 billion, up from the previous range of $37-40 billion. Capital expenditures for 2025 are expected to increase significantly. Meta has expanded its infrastructure team, with a total of 72,404 employees as of the end of September, a 9% increase from the same period last year.
Zuckerberg stated during the earnings call that there are many opportunities to use AI to accelerate Meta’s core business, which should yield high returns on investment in the coming years, so more investments should be made.
He also mentioned the Ray-Ban Meta Glasses and the newly launched affordable Quest 3S. Zuckerberg believes that this is possibly the most vibrant moment he has seen in the industry, and he will focus on ensuring that Meta can leverage this opportunity to create great products.
