2 weeks Ago By The Straits Times
Chief executive Mark Zuckerberg warned that Meta will continue to spend significantly on AI infrastructure and other projects like the metaverse. SAN FRANCISCO – Meta Platforms chief executive Mark Zuckerberg will ramp up heavy investments in artificial intelligence (AI) and other futuristic technologies, continuing a years-long tug-of-war between the company’s long-term bets and the core advertising business that provides the vast majority of Meta’s revenue. Mr Zuckerberg warned investors on Oct 30 that Meta will continue to spend significantly on infrastructure and other projects like the metaverse and AI-powered glasses, efforts he believes are core to the company’s future.
That will be supported by the ads business, which isn’t generating the kind of momentum Wall Street expected. Meta shares fell more than 2.8 per cent in extended trading.
Meta cautioned that losses from Reality Labs, its division focused on AI and augmented reality, will continue to widen “meaningfully” this year, adding that the 2025 budget is still being finalised. Reality Labs reported a US$4.4 billion (S$5.
8 billion) operating loss in the quarter. With costs projected to reach nearly US$100 billion this year, Meta is putting pressure on its core advertising business to fund the effort. Meta told investors on Oct 30 that revenue for the current quarter would be between US$45 billion and US$48 billion.
Analysts were expecting fourth-quarter revenue of US$46 billion. Mr Zuckerberg has worked to re-frame the social media company as an AI innovator in recent years, changing investor perception of Meta’s potential growth. Meta has developed several key AI products as part of that pivot, including large language models used to power chatbots, an assistant built into its various social apps, and AI-powered smart glasses.
Meta is already working on the next version of Llama, the large language model that powers its AI products and services, and Mr Zuckerberg said Llama 4 will be faster, more powerful and more cost-effective than previous models. Some of Mr Zuckerberg’s most ambitious projects, though, are still years away from mainstream consumption. Eventually Mr Zuckerberg hopes that users will work and play inside of a digital universe known as the metaverse, which Meta is still building out.
The company also recently unveiled its first pair of augmented reality glasses, which can project images onto the physical world. Mr Zuckerberg hopes that those glasses, called Orion, may one day rival the smartphone. That focus on AI has helped fuel Meta’s stock price, which was up more than 67 per cent this year at market close on Oct 30, making it one of the best performing stocks in the S&P 500.
But it has also come with a steep cost. “Our AI investments continue to require serious infrastructure and I expect to continue investing significantly there,” Mr Zuckerberg said. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
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