Meta is placing a big bet on the world of artificial intelligence and this move is already shifting the gears of the company towards a positive direction. The immediate increase in capital investment demonstrates just how far Meta will go to win the race on AI. Some concerns exist that making such massive investments will negatively affect profits over the short term, but it is moving in the right direction.
Artificial intelligence is contributing to increased usage of Facebook, Instagram, and WhatsApp. Its platforms have more than 3.4 billion daily users currently. Video viewing on Instagram and Facebook rose by over 20% in the last one year. These are direct evidence that the AI-driven, smarter suggestions of Meta are liked and received by people.
AI is also giving a significant boost to the advertising business. Ad revenue is increasing rapidly, and new AI tools make advertisers more efficient to conduct successful campaigns. Meta is deploying improved AI models to more of its products, which translate to the better performance of its customers. Its new video generation tools are already being used by almost 2 million advertisers. This surge of innovation is helping Meta stay ahead of competitors and increase its already large network effect.
This momentum is evident in the financial outcome. The increase in ad revenue was more than 20%, and particularly sharp in Europe and other international markets. Wall Street is taking notice, and one analyst has suggested that Meta shares might be worth as much as $1,000 per share by the same time next year. Analysts have a strong buy consensus as they view the company as a leading candidate to capitalize on AI.
Finally, the development of an AI-focused Meta can potentially become its reality in the future. As dramatic as this level of expenditure is, the fact that the company is pushing greater involvement and more effective outcomes with ads points to the prospect of this wager coming good. Provided that these trends are maintained, Meta might lead to an even greater growth and more market leadership.
