Meta (META) shares hit a 52-week high on Thursday as investors celebrated the company’s return to earnings growth. One of the main factors is artificial intelligence.
Further integration of AI It was the driving force behind Meta’s first profit increase in three quarters, the company said Wednesday. Reel monetization has increased by more than 30% on Instagram and by more than 40% on Facebook on a quarterly basis as AI is playing a bigger role in the platform.
Since Meta launched its AI-powered Instagram Reels, time spent on Instagram has increased by 24%.
“(Generative AI) should also help create more engaging experiences and generate more engagement,” Meta founder and CEO Mark Zuckerberg said during the company’s earnings conference call Wednesday night. said in “And that in itself creates more opportunities for advertisers.”
In the first quarter, Meta achieved $28.1 billion in advertising revenue. This beat Wall Street’s estimate of $26.76. His earnings per share for the company came in at $2.20, beating analysts’ expectations of $2.01. Meta forecasts second-quarter earnings in the range of $29.5 billion to $32 billion, beating estimates of $29.48 billion.
Shares of the company, formerly known as Facebook, surged 14% in intraday trading on Thursday.
AI is having its second consecutive quarter of technology earnings moments following the wildly popular launch of OpenAI’s ChatGPT in late November. But not all companies have the same plans for new technology.
Nvidia (NVDA) sells AI-powered supercomputers. Microsoft (MSFT) is integrating ChatGPT into its search engine to compete with Google (GOOGL), which has its own AI search bot.
Meta’s approach is a little different. Meta’s core business since Facebook’s early days has been advertising sales, which still make up his 98% of the company’s quarterly revenue. Unsurprisingly, enhancing advertising with AI is where Meta believes new technology can have the most impact.
When explaining why Meta is open sourcing its AI, Zuckerberg said, “We’re playing a different game with different infrastructure than companies like Google, Microsoft, and Amazon. It’s just that it creates a lot of incentives for us.”
push the meta The entry into AI comes at a time when the company is still bleeding from its heavy metaverse investment. Meta’s Reality Labs reported his $4 billion operating loss in the first quarter, compared to his $3 billion operating loss in the same period last year.
These losses have weighed heavily on Meta’s stock in the past, but in Meta’s “year of efficiency,” cost-cutting efforts and the benefits of AI have made Wall Street more bullish. In a note to clients Wednesday, research analyst Benjamin Black at Deutsche Bank highlighted AI-driven ad performance as a catalyst for accelerating revenue growth through the end of 2023.
“Improvements in Meta’s (AI and machine learning) capabilities not only improve Reels’ content ranking and recommendation algorithms, but also drive user engagement. [it] It also improves the efficiency of ad serving and improves the monetization of the service,” writes Black.
Zuckerberg said on the earnings call that he feels Meta is “no longer lagging behind” in building AI infrastructure. Now the focus has shifted to finding new ways to integrate and optimize technology.
“This will literally affect all of our products and services in multiple ways,” Zuckerbeg said. “This is a very big wave, a set of new technologies available and a company-wide effort.
Josh is a reporter at Yahoo Finance.
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