Staggering levels of investment in AI infrastructure have raised concerns that Big Tech’s recent boom is entering bubble territory. So is Meta, like the rest of Silicon Valley, overspending on AI?
“Obviously, no Meta executive would say ‘yes’ to that question,” Alex Schultz, Meta’s chief marketing officer and vice president of analytics, told Business Insider in an interview this week at Web Summit, a tech conference in Lisbon.
Meta plans to spend up to $72 billion on AI infrastructure this year, and says it will spend even more next year. CEO Mark Zuckerberg said earlier this year that he would rather risk “wasting hundreds of billions of dollars” than delay developing superintelligence. Amazon, Google, Microsoft, and privately held AI companies such as OpenAI are posting record capital spending across AI. That includes chips and data centers, as well as higher salaries to attract and retain top AI research and engineering talent.
Despite the impressive amount of money moving around, Schultz said the current trends in the sector’s market capitalization and revenue are modest compared to historical bubbles. Compared to the U.S. railroad bubble of the late 19th century, Schulz said the current AI boom “seems aggressive, but it’s not crazy.”
Analysts at Goldman Sachs estimated in an October research note that AI-related investment in the U.S. is less than 1% of GDP, compared to 2% to 5% of gross domestic product (GDP) in the past. technology boomIncluding railway expansion.
Schultz said Meta’s AI investments have already translated into billions of dollars in revenue through improved advertising tools and content ranking algorithms. Meta is expected to generate about $200 billion in revenue this year and trades with a market capitalization of about $1.5 trillion.
Schultz said Meta’s biggest AI-powered revolution is a more sophisticated content recommendation system. He said this was necessary because so much of the time you spend on Facebook and Instagram now is looking at “disconnected content” – content that doesn’t come from your friends or pages or groups you actively follow.
“If we hadn’t made that pivot, how much smaller would our company be today?” Schultz said. “We were able to handle large-scale disruption without making it irrelevant. This is incremental for our business.”
Schultz said the Meta AI app’s newly released Vibes feed – a feed of short-form, purely AI-generated video content – represents “probably a big part of the future” for the company, and so far has demonstrated “good retention” of users once used. (Vibes has been criticized by many online as an “AI slop.”)
Video generation models require more computational power than text or image models, creating significant energy demands that can strain power grids and water supplies. The popularity of apps like OpenAI’s Sora raises questions about whether the entertainment value is worth the environmental trade-off.
“The vibes aren’t that big. We’re not draining a lake or using multiple nuclear power plants,” Schultz said. He added that this is one of many experiments the company is working on to train and learn AI models.
“I feel like there’s a Western Calvinist tendency in society where having fun and having fun isn’t the essence of life,” Schultz said. “And life teeth It’s about doing good things that are fun, and doing everything else to do good things that are fun. ”
The AI wave has prompted what Schultz described as productive conversations about the safety of nuclear power plants and the use of desalination plants to produce fresh water from seawater.
“Humans, in general, have the ability to be much more affluent than they actually are,” Schultz said.
