It looks like Meta’s Vibes feed is just the start of the company’s pivot toward AI slop. In an earnings call, CEO Mark Zuckerberg said that “we’re going to add yet another huge corpus of content” to Meta’s recommendation system, via AI’s ability to create and remix content — so you’re likely to see even more AI generated posts on Facebook and Instagram.
“Social media has gone through two eras so far. First was when all content was from friends, family, and accounts that you followed directly. The second was when we added all the creator content,” he said, seemingly suggesting that AI content will be the third era.
Zuckerberg added that recommendation systems that “deeply” understand AI content are “increasingly valuable” since they can “help you achieve your goals.”
He then nodded to Vibes, calling it an example of a new type of content enabled by AI. Retention on the feed “is looking good so far, and its usage keeps growing quickly week over week,” he proclaimed. Furthermore, there are more opportunities to build “many more novel types of content aheads, as our new models become ready,” Zuckerberg added. To put some numbers to Vibes takeup, Meta CFO Susan Li said that users have generated over 20 billion images in the feed to date.
Meta has already introduced a number of AI features across its social media platforms. Those include in-app photo and video editing via text prompts directly in Instagram Stories, AI chatbots across WhatsApp, Messenger, and Instagram, and a standalone Meta AI app that includes an AI assistant and discovery feed.
Meta (META) reported its third quarter earnings on Wednesday, beating on the top and bottom lines.
The company’s shares rose as much as 4% in after-hours trading, as it continues to rebound from a lackluster 2022.
Meta’s been navigating rough waters, steadying itself as an AI-powered advertising giant and working through its capital-intensive expansion into VR and AR. The Facebook and Instagram parent has been in the process of shoring up two key areas of interest for investors — its AI efforts and its position in the digital advertising market, which has been in a prolonged slump and is just showing signs of a rebound.
Meta’s Q3 advertising revenue came in at $33.64 billion, compared to the expected $32.94 billion. The company beat on ad impressions estimates, clocking an increase of 31% year over year, versus the expected 29.6%.
Meta shares have risen more than 140% year to date, massively outperforming both the S&P 500 and the Nasdaq Internet Index, which are up around 9% and 34% this year, respectively.
“The stock has done well this year,” Neuberger Bergman analyst Daniel Flax told Yahoo Finance Live on Wednesday. “[If they can] drive durable growth and translate that into earnings per share and free cash flow generation, I think the stock can continue to work its way higher.”
Meta’s near future could be mired in legal risks, as the company is staring down federal and state lawsuits from 42 attorneys general, who are alleging that Facebook and Instagram’s features geared toward children are addictive.
“We’re disappointed that instead of working productively with companies across the industry to create clear, age-appropriate standards for the many apps teens use, the attorneys general have chosen this path,” a Meta spokesperson said in a statement.
Currently, Wall Street analysts’ recommendations for Meta break down to 60 Buys, seven Holds, and two Sells.
The earnings rundown
Here are the key numbers that Meta reported, as compared to analysts’ estimates compiled by Bloomberg:
Revenue: $34.15 billion actual, up 23% year-over-year, versus $33.52 billion expected
Earnings per share: $4.39 actual, up 168% year-over-year, versus $3.60 expected
Facebook daily active users: 2.09 billion actual, versus 2.07 billion expected
Zuckerberg’s “Year of Efficiency” initiatives seem to be paying off, as the company is decreasing its 2023 capital expenditures outlook. It’s revising the range to be between $27 billion and $29 billion, a decline from the previously announced $27 billion to $30 billion.
Meta’s Family of Apps business, which also includes WhatsApp, raked in over $33 billion in revenue. The division’s operating income was $17.49 billion for the quarter, handily beating analysts’ expectation of $15.23 billion.
But Reality Labs, the company’s mixed reality business, has been a subject of controversy. Since 2022, Meta has lost more than $20 billion running Reality Labs; $13.7 billion of that came from last year.
The company said it expects these losses to continue, and will increase notably year over year in 2023. Meta recently launched its Quest 3 headset, priced at $499.99.
“We had a good quarter for our community and business,” Meta CEO Mark Zuckerberg said in a statement. “I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio.”
