Meta, with increased revenues and profits, fell more than 3% after hours with plans to significantly increase AI investments.

Despite massive investments, the metaverse business is still struggling.
According to analysts, the main reason for the decline in metaverse stock price is the fact that the company is still in its early stages.Reality Labs, a division of Meta Universe, is still incurring losses.The division primarily generates profit from selling Meta's VR headset 'Quest' and smart glasses 'Ray-Ban Meta.'

Facebook co-founder and Meta's CEO Mark Zuckerberg believes that by developing VR and AR technologies, the company can take a leading position in the next potentially mainstream personal computing platform.

However, this investment has been costly for Meta.As of the earnings reports on Wednesday, Reality Labs has accumulated operating losses exceeding 58 billion dollars since 2020.According to the company's CFO, due to ongoing investments in product development and ecosystem expansion, the operating losses for Reality Labs are expected to significantly increase in 2024.

Nevertheless, Meta has not given up on its efforts towards the Metaverse. In September, at the company's annual conference "Connect," Zuckerberg showcased the Orion device, which generated excitement and increased internal trust within Meta for ambitious plans.

The success of the Ray-Ban Stories smart glasses developed in partnership with eyewear giant EssilorLuxottica has increased consumer interest in future Orion AR glasses, leading to plans to gather developers to develop apps for the device next year.

Accenture will continue to promote AI transformation, and next year's investment in facilities is expected to increase significantly.
While the Metaverse business is not performing particularly well, Meta anticipates that its holiday season revenue will exceed expectations, attributing the significant improvement in its core advertising business to AI enhancements.

According to the earnings report, koss corp's third-quarter revenue increased by 19% compared to the same period last year, surpassing analysts' financial estimates. Zuckerberg stated that the revenue increase was due to AI investments, revealing that over 1 million advertisers are already using koss corp's generative AI advertising tool.

AnalystsEnhancements in advertising tools utilizing AI and the success of the short video product 'Reels' powered by AI are expected to drive Meta's revenue growth this year.Many analysts predict that 2024 will be a breakthrough year for digital advertising as economic forecasts improve, interest rates decrease, and consumer spending continues. Advertising revenue accounts for a large portion of Meta's earnings, and the potential increase in ad spend during the holiday season could significantly boost the company's profits.

"Thanks to advancements in AI in apps and businesses, we had a good quarter, and there was strong momentum in koss corp's Meta AI, Llama adoption, and AI-powered eyewear," said Zuckerberg.

The company,Plans to continue major investments in AI, with a significant increase in capital expenditures expected by 2025.It is stated that especially infrastructure spending will accelerate mainly due to the increase in depreciation expenses and the increase in operating expenses due to the increase in infrastructure.

Meta announced the expansion of Meta AI to more countries, including the United Kingdom and Brazil, at the beginning of this month to compete against OpenAI's ChatGPT and Dall-E. Once fully deployed, Meta will make Meta AI available in 43 countries and 12 languages.

Mr. Zuckerberg has previously emphasized several times that the company is making significant investments in AI, helping to change investors' perceptions of the company.

Meta's key AI products include various large-scale language models (LLMs) to support chatbots, AI assistants integrated into various social apps, and AI-powered smart glasses. Meta has deployed the Llama model family for consumer and advertising products and has made the platform open source.

According to Meta, companies like Accenture, DoorDash, and Goldman Sachs use Llama to develop their own AI software.

The company is also developing a search function for its Meta AI service, allowing users to ask and receive answers to current issues. This is aimed at eliminating Meta's dependence on Google or Microsoft search engines to respond to specific user inquiries.

Many of Metaverse's long-term AI investments, even if realized, are expected to take several years to achieve significant profit contributions, but the company has already optimized ad targeting and content recommendations through AI improvements, directly impacting performance.

Jesse Cohen, a senior analyst at Investing.com, said, "Meta is currently experiencing rapid growth, and it is clear that AI is driving this growth." However, he added, "Investors seem to be disappointed with the company's forward guidance and the increased costs associated with AI development."

-moomoo News by Evelyn
Source: Bloomberg, WSJ, Investing
This article uses automatic translation in some parts.