Facebook owner Meta touts AI might as digital ads boost outlook; shares jump
Meta Platforms Inc CEO Mark Zuckerberg said on Wednesday that AI was helping the company boost traffic to Facebook and Instagram and earn more in ad sales, as it forecast quarterly revenue well above analyst expectations.
Meta shares surged 12% in after-hours trading, adding over $50 billion to its market value and continuing a rally in tech shares that started after Google parent Alphabet Inc and Microsoft Corp posted strong results on Tuesday.
Meta narrowed its cost outlook range for the year, saying expenses could be less than the company forecast in March, and also beat expectations for first-quarter profit and revenue, which rose for the first time in nearly a year.
The company, which has been slow to adopt AI-friendly hardware and software systems for its main business, has carried out several expensive overhauls to bolster its core business, including a massive project to upgrade AI capacity.
"At this point, we are no longer behind in building out our AI infrastructure," Zuckerberg said on a conference call. "And to the contrary, we now have the capacity to do leading work in this space at scale."
AI recommendations increased time spent on Instagram by 24% in the January-March quarter, Meta said.
"I think similar to Alphabet, a lot of Meta's AI investments have gone into the advertiser side," said James Cordwell, analyst at Atlantic Equities.
"So as a consumer 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 has also kicked off an aggressive cost-cutting drive, with plans to eliminate 21,000 jobs and flatten its middle-management structure as it works towards Zuckerberg's goal of
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