Meta Company, the parent company of Facebook, is gearing up for a significant increase in expenses next year due to its substantial investments in artificial intelligence model.
By, the company's strong performance in the advertising sector has provided reassurance to investors, demonstrating that Meta’s core business remains robust.
In its secondly quarter report, Meta exceeded expectations, leading to a notable surge in share prices during after-hours trading also.
Although the company did not disclose the exact amount allocated for AI investments model to next year, it indicated that the figure would be substantial.
Despite concerns that these increased expenses could unsettle investors, analysts believe Meta’s recent financial results show that the company is well-positioned to manage the additional costs.
According to Williamson, founder and chief analyst at Sonata Insights platform, the positive market responsive to Meta’s earnings report is a promising sign for AI stocks.
She pointed out that strong performance in a company’s core business can make AI investments more appealing, whereas weaknesses in the core business, as recently observed with Alphabet’s YouTube, might make the stock appear riskier.
Williamson emphasized that Meta stands out among tech companies pursuing AI because it already generates significant advertising revenue, unlike others that are trying to establish new business models. Additionally.
while Google faces challenges impacting its core ad business, Meta’s AI investments are mainly aimed at improving advertising efficiency and developing new features that could eventually become revenue generators.
CEO Zuckerberg expressed confidence in Meta's future, emphasizing that the company's strong quarterly results have positioned it well for continued investment in growth.
He noted that Meta AI is on track to become the most widely used AI assistant globally by the end of the year.
Meta also reported impressive growth in its user base, with approx 3.3 billion daily active users across its suite of apps—Facebook, Instagram, WhatsApp, and Messenger—a 7.1% increase from the previous year. Although specific figures for Facebook users were not disclosed, the company highlighted that WhatsApp now has base over 100 million monthly users in the US, and Threads, Meta’s competitor to X, is nearing 200 million monthly users.
Looking ahead to the third quarter.
Meta anticipates revenue between $40 billion and $45 billion. The company also expects infrastructure costs to drive significant expense growth next year as it continues to invest heavily in AI capacity, including data centers.
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