Although Meta is chasing the same benefits of AI technology as its rivals, analysts say it's doing a better job of explaining why AI matters after all — with Meta's AI-driven revenue growth increasing investor confidence and increase its stock.
Meta has raced ahead of fellow Big Tech like Alphabet's Google, Apple and Microsoft in year-to-date share gains, growing over time 53% year-to-date at the time of writing, compared to about 20% for Alphabet, 22% for Apple and 12% for Microsoft.
Meta also reported sales of $39.1 billion for the quarter ended June 30, which was above analysts' estimates of $38.3 billion. In contrast, second quarter earnings are reported by Meta's competitors such as Amazon, Microsoft and Alphabet fell short of Wall Street expectations. Investors wanted to see AI's multi-billion-dollar bets are paying off, with increased sales to balance spending.
analysts told Bloomberg on Thursday that Meta CEO Mark Zuckerberg sold the benefits of AI better than other Big Tech CEOs in a recent earnings call in July. Meta's key to connecting AI to revenue was a clear area of impact: AI helped grow Meta's advertising business, which accounted for 98% of the company's revenue the last quarter.
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“(Meta) has argued its vision for integrating AI more clearly than its competitors,” investment strategist Andrew Ye told Bloomberg.
Almost all of Meta's millions of advertisers use at least one of Meta's AI-driven advertising tools. AI-powered content recommendations also keep users' attention longer, increasing ad revenue.
“Across Facebook and Instagram, advances in AI continue to improve the quality of recommendations and drive engagement,” Zuckerberg said on the earnings call, according to transcript.
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Zuckerberg said AI will be used “in the coming years” to create personalized content for advertisers. Meta is working towards a future where advertisers will only need to know their business goals and budget, and Meta will handle the rest with the help of AI.
Meta CEO Mark Zuckerberg. Photo: SeongJoon Cho/Bloomberg via Getty Images
In 2025 and 2026, Zuckerberg sees AI increasing revenue while continuing to strengthen existing products, such as content recommendations and advertising.
“I think part of what's so fundamental about AI is that it's going to end up touching almost every product we have in some way,” he said on the call.
Building AI infrastructure is expensive, with an AI model costing high 100 million dollars to develop. Zuckerberg announced this Meta's greatest AI model to date, released in July, cost hundreds of millions of dollars to develop.