Why Meta is excelling in AI ROI where others falter
META Platforms, the parent company of social media platforms Facebook, Instagram, and WhatsApp, has separated itself from the pack of Big Tech companies by showing measurable results on its AI investments.
Big Tech companies faced the same questions on their respective earning calls: With all the money being pumped into AI infrastructures, is there a way to determine the ROI on these investments? Most of them do not have a definite answer.
That’s because they are all in a race to stay ahead of the rest when it comes to AI advancements.
In that regard, META is no different as it continues to pump money into AI just like the rest of the companies.
What sets META apart though is the fact that their AI investments have brought measurable improvements to their top and bottom lines.
Monetizing AI through advertising
One key area where META has seen a significant return on its AI investments is advertising.
The company used AI to enhance the efficiency and personalization of its advertising platform, allowing businesses to create better ad campaigns.
This improvement has resulted in higher engagement rates for advertisers, resulting in them pumping more money into advertising their businesses.
META has also been able to democratize its AI-backed advertising tools, making it easier for small businesses to compete with larger businesses.
Features such as audience targeting and ad optimization, improved through AI, have helped businesses reach their audience without needing much technical knowledge or large budgets.
Investments in AI to continue
META isn’t just stopping at advertising. It has been working on implementing AI across all its platforms.
Its chatbots have become more accurate thanks to investments in large language models (LLMs). This has resulted in increased user satisfaction, resulting in a better and happier overall experience for the users.
As these investments continue, they are likely to weigh on the company’s bottom line.
But with a CEO like Mark Zuckerberg at the helm of affairs, investors can rest assured that ROI isn’t ignored. The CEO has done a great job so far of calming investor nerves over the issue of increased AI investments. The most recent earning call was an example of this.
He explained the near-term benefits of AI, the long-term benefits and the timing of how all this is going to play out. And he did it in a compelling way.
Gene Muster, Deepwater Asset ManagementAccording to JPMorgan’s Doug Anmuth, META ‘continues to earn the right to spend big on GenAI’.
No one can say the same about other tech companies, which continue to invest heavily without a measurable target in sight.
For them, not getting left behind is more important than a direct impact on the bottom line.
This has also been reflected in the share performance, with the stock up 50% YTD. In comparison, Microsoft has only risen 10% this year, Amazon 16%, and Google 18%. META leads the pack, and rightly so.