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Although Meta has the same AI technology goals as its competitors, analysts say the company is better at explaining why AI matters to its bottom line. Meta's AI-driven revenue growth is boosting investor confidence and driving up the company's stock price.
Meta has outpaced major technology companies such as Google parent Alphabet, Apple and Microsoft in year-to-date share price gains, posting year-to-date growth of over 53% at the time of writing, compared to about 20% for Alphabet, 22% for Apple and 12% for Microsoft.
Meta also reported revenue of $39.1 billion for the quarter ended June 30, above analyst estimates of $38.3 billion. In contrast, second-quarter earnings reports from Meta rivals such as Amazon, Microsoft and Alphabet fell short of Wall Street expectations. Investors wanted multibillion-dollar AI bets to pay off and revenue growth to offset expenses.
Analysts told Bloomberg on Thursday that Meta CEO Mark Zuckerberg did a better job of selling the benefits of AI on a July conference call than other CEOs at major technology companies. Meta's key to linking AI to revenue was a clear area of impact: AI helped Meta grow its advertising business, which accounted for 98% of the company's revenue last quarter.
Related: Nvidia CEO Jensen Huang calls Mark Zuckerberg's vision for the future of AI a “home run idea”
“[Meta] has arguably articulated its vision of AI integration more clearly than its competitors,” investment strategist Andrew Ye told Bloomberg.
Nearly all of Meta's millions of advertisers use at least one of Meta's AI-powered advertising tools. AI-powered content recommendations also keep users engaged longer, increasing advertising revenue.
“At Facebook and Instagram, advances in artificial intelligence continue to improve the quality of recommendations and drive engagement,” Zuckerberg said in the conference call, according to the transcript.
Related: Mark Zuckerberg says Apple's 'limited' platform is the 'main reason' he's pushing for open-source AI
Zuckerberg said AI will be used “in the coming years” to create personalized content for advertisers. Meta is working toward a future where advertisers only need to know their business goals and budget, and Meta will do the rest using AI.
Meta CEO Mark Zuckerberg. Photographer: SeongJoon Cho/Bloomberg via Getty Images
In 2025 and 2026, Zuckerberg expects AI to increase revenue by further strengthening existing products such as content recommendations and advertising.
“I think the fundamental thing about AI is that it will ultimately impact almost every product we have in some way,” he said on the conference call.
Building AI infrastructure is expensive. Developing an AI model costs over $100 million. Zuckerberg has revealed that Meta's largest AI model to date, released in July, cost hundreds of millions of dollars to develop.
Related: New Google report reveals the hidden costs of AI
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