You know that DJ Khaled song with the chorus, “All I do is win, win, win, no matter what. Got money on my mind, I can never get enough”?
Rather than the usual classical music or corporate Muzak, that’s what Meta should play before kicking off its quarterly earnings calls.
Because Meta keeps on minting money every quarter and dodging the headwinds.
Meta’s stock jumped by nearly 7% in after-hours trading on Wednesday based on strong results.
In addition to beating expectations with $39.1 billion in total Q2 revenue – up 22% year-over-year (of which all but around $389 million came from advertising) – Meta pulled off the magic trick of increasing both the number of ad impressions on its platform and CPMs by 10% apiece.
Income for Meta’s family of apps – the trio of Facebook, Instagram and WhatsApp – was $19.3 billion, with a 50% operating margin.
Capex, whatev – it’s AI all day
With margins like that and ad revenue on the rise, investors can overlook the fact that Meta plans to significantly increase its spending to support its AI product development and research in the year to come.
But it’s well worth spending big now, CEO Mark Zuckerberg told investors.
“At this point, I’d rather risk building capacity before it’s needed rather than too late, given the long lead times for spinning up new infra projects,” he said.
Eventually, AI will touch nearly every product Meta offers, including to improve existing ones and also make new ones possible, he said.
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“It’s why there are all these jokes about how all the tech CEOs get on these earnings calls and just talk about AI the whole time,” Zuckerberg said. “It’s because it’s actually super exciting and it’s going to change all of these different things over multiple time horizons.”
AI is already fundamentally changing the way that advertisers use Meta’s tools.
In the past, advertisers would come to Facebook or Instagram with a specific target audience in mind, like a certain age group, geography or people with a particular interest.
Now, Meta’s ad systems have improved to the point where they can often do a better job of predicting which audiences to target than the advertisers can themselves, Zuckerberg said.
We’ll take it generate it from here
But advertisers still need to develop their own ad creative. Not for long, though, Zuckerberg said.
“In the coming years, AI will be able to generate creative for advertisers as well, and we’ll also be able to personalize it as people see it,” he said. “Over the long term, advertisers will basically just be able to tell us a business objective and a budget and we’re gonna do the rest for them.”
Guess we can all just go home?
According to Meta’s CFO, Susan Li, more than 1 million advertisers have used at least one of the company’s generative AI ad features – image expansion, background generation, text generation, etc. – in the past month.
Li also highlighted additions from last quarter to Advantage+, Meta’s AI-powered ad platform for automated shopping campaigns. New bits include the ability to automatically upload multiple images and videos within a single ad and an expanded list of conversion types, such as add to cart.
Now Meta just has to make sure the system doesn’t bug out.
