AI Comes To Meta's Rescue

Meta Platforms META is still very much devoted to developing a virtual reality, with its latest quarterly earnings report showing it is not giving up on the metaverse it decided to build its future on. By the looks of it, AI is exactly what Meta needed to somehwat ease its investors' concerns.

The Unveiling Of AI testing Playground

On Thursday, Meta revealed the AI Sandbox that will help advertisers build campaigns and improve their results, as well as an updated Meta Advantage portfolio of automated tools that advertisers can use to enhance their campaigns. These efforts are aimed at helping advertisers both save time and improve the results of their efforts. They are also Meta’s latest effort to show investors that costly AI efforts justify their hefty costs.

Outlook That Reflects The Weight Of AI Efforts

During the company’s latest earnings call, CFO Susan Li guided for the full year capital expenditure to be in the range between $30 billion and $33 billion as Meta continues to build its AI capacity.

Positive Results Showed A Strong Quarter

For its first quarter, Meta succeeded to beat analyst expectations as it posted YoY revenue growth for the first time in three quarters.

Following Through Is Not An Easy Task

Concerns are growing that the metaverse efforts are draining valuable resources that exceed $10 billion a year, without any tangible benefits on the horizon. But by changing the company name to the name of the product, backing out stopped being an option so Meta can only follow through what Zuckerberg envisioned and that is not only to create the metaverse, but for the company to also become a leader in AI research along the way, facing off Microsoft Corporation MSFT and Alphabet Inc GOOGGOOGL. 

Microsoft Is Leading The Way To A New AI Era

Microsoft has its eyes set on not only winning the AI wars but also on obtaining the search engine crown. Just a few months ago, Microsoft unveiled its co-pilot for web search, the AI-powered Bing and Edge. During its latest earnings call, the CEO of Microsoft, Satya Nadella, promised to reinvent the future of online search, the largest category of software in the world. Despite the company's long-standing partnership with Nvidia Corporation NVDA, Microsoft even went further by joining forces with Advanced Micro Devices Inc AMD to develop AI semiconductor chips that could challenge Nvidia’s dominance. 

Google’s Response

Alphabet, whose Google is known as the “search king” has added AI in its core product attempt to create some kind of excitement that Microsoft received when it integrated its AI-powered chatbot to Bing. During Google’s annual conference that took place on Wednesday, Alphabet revealed a revamped version of its search engine named the Search Generative Experience. With this move, Alphabet can offer crafted responses to open-ended queries while keeping its recognizable links to the Web, with the search king clearly showing that Google will respond to Microsoft’s AI challenge. 

Despite A Strong Quarter, Meta Is Facing Tough Times

In order to reach Zuckerberg’s desired destination without the scenario of staying the metaverse course on a sinking ship, the weakening online ad market made it obvious that Meta will need more revenue sources for its journey. Young users are fleeing the platform and legislation is working to put a stop on its revenue model based on vacuuming up and selling the gathered user data. In its past life as Facebook, the company faced severe criticism in this regard. Unlike Pinterest Inc PINS who remained loyal to its inspirational identity, Facebook’s moral grounds were questioned as it failed to take action in stopping hate speech, not to mention the Cambridge Analytica scandal. Social media has received so much backlash from all sides, and Pinterest is one of those rare platforms that succeeded to stay out of it. Although Pinterest is paying the price in terms of lagging in terms of monetization and profitability, its CEO is willing to pay the costs of creating an algorithm and consequently, a business model, that is built around the concept of making people feel better, as opposed to the current one that thrives on endorsing the bad sides of the human nature. Moral and ethics are not the kind of concept that Meta’s CEO was ever linked to. Although Pinterest still needs to prove that business can be done in a way that makes the world a better place, the platform did receive the multiannual support from Amazon who is more than capable to help it make that part of the equation happen, while Meta’s supporters are getting increasingly concerned. 

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.