Meta's second-quarter earnings highlight a continuing trend: while generative AI is here, it will take time to become a significant revenue source.
Solid financial performance
On Meta's Wednesday earnings call, CFO Susan Li reassured investors that financial returns from recent AI investments would materialise “over a longer period.” Zuckerberg explained Meta's strategy of spending billions on Nvidia hardware and other infrastructure ahead of future returns: “It's hard to predict how this will trend multiple generations into the future, but at this point, I'd rather risk building capacity before it is needed rather than too late.”
Zuckerberg confidently stated that the Meta AI assistant is on track to become the most used in the world by the end of the year. While generative AI features are expected to boost engagement, actual revenue is anticipated from business use cases. This includes AI creating ads from scratch and enabling businesses to operate their AI agents on WhatsApp for customer service.
Key insights from the earnings call
Meta is already preparing to train Llama 4, which Zuckerberg aims to make the “most advanced” model in the industry by its release next year. This will require almost ten times more computing power than Llama 3.1. Jensen Huang of Nvidia might owe Zuckerberg a few leather jackets for these hefty hardware investments.
Regarding recent discussions about Meta potentially investing in the eyewear giant EssilorLuxottica, Zuckerberg did not confirm any investment. However, he expressed excitement about developing “future generations of AI glasses” following the initial success of the latest Meta Ray-Bans.
Though the metaverse has taken a backseat to AI in recent quarters, Zuckerberg mentioned that sales of Quest 3 are exceeding expectations. However, he did not specify what those expectations were. Sources indicate a cheaper headset version will be announced at the company's Connect conference in September.
Threads, Meta's social platform, is “about to hit” 200 million monthly users after reporting 175 million at the beginning of July. Additionally, Facebook is seeing renewed growth among young adults in the US. Zuckerberg stated, “The numbers we're seeing, especially in the US, really go against the public narrative of who uses the app.”
Meta's robust financial performance, combined with its ambitious AI investments, paints a picture of a company ready to shape the future of technology. However, as with all significant technological shifts, the actual financial impact of these investments will take time to unfold.
