Zuck is Willing to Pay Big for Both the Metaverse and AI – The Average Joe
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    Zuck is Willing to Pay Big for Both the Metaverse and AI

    victorlei

    April 27, 2023

    Number of times “AI” was said on Meta’s earnings call: 47. And “metaverse”: 10.

    Meta’s CEO, Mark Zuckerberg, has a new passion, and this one’s looking like it has more legs to stand on than the metaverse.

    “Year of efficiency” → “Year of recovery”

    Meta is up over 90% this year — still down 37% from its peak — but remaining meta employees patient investors, you’re almost back.

    Highlights from their earnings report:

    • Sales are growing again — rising 3% as opposed to falling 4% in the quarter before. Meta expects next quarter’s sales growth to be as high as 11% — the fastest since 2021.
    • Reality Labs (metaverse unit) is still incinerating money — losing $3.99B in the first quarter, with headset sales falling 51% from last year.
    • IG Reels algorithm gets better — with time spent on the product growing 24%. Problem with eels: they make less money than stories.

    What’s AI got to do with Meta?

    It’s the tech that helps keep you on the app show you the right content + more ads. When Zuck was asked if he was moving away from the metaverse on Meta’s earnings call, he responded, “That’s not accurate.”

    Zuck wants to make both AI and the metaverse a reality.

    • In the first quarter, Meta spent over $9B on research and development (33% of total revenue — double that of Alphabet and Microsoft).
    • Zuck said AI has become a “main driver” in their capital expenditures — with the goal of using generative AI to help advertisers create better ads.

    Looking forward: The digital ad market is still in a slump as advertisers continue to hold back in the face of a recession. But when ads make a comeback, AI-powered Zuck will be ready.

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