Facebook's parent company Meta is showing strong numbers
Facebook and Instagram remain cash cows. With their advertising revenues, Meta, the company of Mark Zuckerberg, finances ambitious investments in Artificial Intelligence. The high expenses do not deter investors.
The advertising business of the Meta company, formerly known as Facebook, is running at full speed. In the last quarter, the company's revenue increased by 22 percent year-on-year to around $39 billion. The profit rose by 73 percent to just under $13.5 billion. With this financial cushion, founder and CEO Mark Zuckerberg wants to continue investing in the development of Artificial Intelligence. The Meta AI chatbot is on its way to becoming the most used AI assistant in the world by the end of the year, Zuckerberg emphasized after presenting the figures.
However, the AI visions also require high investments. Meta's expenses in the last quarter increased by seven percent to $24.22 billion. For this year, Meta now expects costs between $37 and $40 billion - and prepares investors for further significant growth in 2025. Above all, computing power for training AI models is expensive.
The Reality Labs division, where Meta bundles the business with virtual worlds and computer glasses, continues to swallow up a lot of money. The area recorded an operating loss of around $4.9 billion after a loss of $3.74 billion the previous year. In contrast, the business with apps like Facebook and Instagram generated an operating profit of $19.3 billion in the last quarter.
Stock in high demand after hours
For the current quarter, the company expects revenues between $38.5 and $41 billion. "Given the healthy profit margins, investors should have no problem with the investment plans of the company," said analyst Max Willens from the research firm eMarketer.
Unlike Microsoft or Google's parent company Alphabet, the prospect of higher expenses at Meta initially did not trigger a renewed sell-off of the stock - on the contrary: it rose by eight percent in after-hours trading on the Wall Street.
The Quarterly figures revealed a 22% year-on-year increase in Meta's advertising revenue, reaching $39 billion. Despite the company's increasing expenses, investors remain supportive, seeing the financial cushion as an opportunity for further Artificial Intelligence investments.
