Influential analyst Rich Greenfield expressed uncertainty about the monetization of AI chatbots, despite acknowledging Meta Platforms Inc. META as a key player in the crowded AI space.
What Happened: During “Last Call” CNBC on Wednesday, Greenfield highlighted that Meta’s commitment to AI investments comes at a time when the space has become “crowded” with competition from ChatGPT by Microsoft and OpenAI, Google Gemini, Anthropic, Perplexity.AI and more.
"There is no doubt that $META is going to be a major player. I think the challenge for investors is one, how big is this investment cycle, given the level of competition, " Greenfield said.
He highlighted that while Meta’s investments in their virtual reality unit Reality Labs and their collaboration with Ray-Ban on AR headsets have been huge, these were not as competitive as the AI space.
"It's not so clear right now,” Greenfield said.
“Yes, AI is making your recommendations better and AI is making the ads better, the content on Facebook and Instagram is going to be better. But how you actually monetize an AI chatbot…the use case and the monetization, isn’t clear. It’s really early days," Greenfield said, advising investors to learn more about the same.
See Also: Elon Musk Reacts After Nvidia Stock Plunges 10% And Erases $212B Market Cap: ‘Rookie Numbers’
Why It Matters: Meta’s focus on AI development has been evident, with CEO Mark Zuckerberg recently hinting at a shift from chatbots to more advanced AI ‘agents’ during the company’s Q1 2024 earnings call. These AI agents, as per Zuckerberg, would be capable of handling more complex tasks and goals, performing numerous queries to achieve the desired outcome.
Moreover, Zuckerberg revealed that over 50% of the content on Instagram and 30% of posts on Facebook are now recommended by artificial intelligence. This revelation came during Meta's first-quarter financial results announcement, where the company reported a 27% year-over-year increase in revenue, beating Street consensus estimates.
Price Action: Meta’s stock closed at $493.50 on Wednesday, marking a 15.57% decrease from its previous close. The company’s Q1 earnings per share stood at $4.710, surpassing the estimated $4.320.
Read Next: Elon Musk Agrees Every American Household Will Have A $1,000-Per-Month Home Robot In 7 Years’ Time
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