Meta's advertising growth is proof that hefty AI spending is already paying off
CEO Mark Zuckerberg Defends AI Spending
For investors who are skeptical of Meta's massive spending on artificial intelligence and whether it will pay off anytime soon, CEO Mark Zuckerberg is urging them to look to the present. After the company's better-than-expected second-quarter earnings report on Wednesday, Zuckerberg and finance chief Susan Li rattled off all the ways that AI has helped the company grow faster than the competition in the digital advertising market, Meta's core business.
Impressive Revenue Growth and Market Dominance
Meta reported revenue growth of 22% from a year earlier to $39.07 billion, with 98% of its sales coming from advertising, primarily on Facebook and Instagram. Its growth rate was double that of Google's ad business, which saw sales increase 11% to $64.6 billion, Alphabet said in its earnings report last week.
AI Driving Business Transformation
Zuckerberg pointed to AI as the foundation behind Meta's refreshed online advertising platform, which was battered after Apple introduced an iOS privacy update in 2021 that made it harder for social media companies to target users across the Internet. Meta's strategic use of AI has resulted in increased user engagement and revenue. 
Positive Market Response and Future Outlook
Meta shares popped 7% in extended trading after Wednesday's earnings report, which included an uplifting forecast for the current quarter. The company's continued investment in AI, particularly in Nvidia's GPUs, demonstrates a commitment to long-term growth and innovation.
Long-Term Vision and Strategic Investments
Meta is not slowing down its AI investments despite the financial losses in the metaverse. The company expects significant CapEx growth in 2025 to support AI research and product development efforts. Meta's AI strategy focuses on improving its advertising platform, driving user engagement, and exploring new revenue opportunities through generative AI. 
