In its last earnings call, Meta Platforms (NASDAQ:) made a concerted effort to add more transparency around its AI strategy.
Mark Zuckerberg laid out the “five major opportunities” the company is pursuing through its AI investments. Analysts at Citi called this out as a significant positive.
Understanding these opportunities is crucial to assessing whether the tech giant is living up to expectations going forward.
How effectively Meta capitalizes on them will likely influence both investor confidence and the company’s long-term growth trajectory.
Opportunities for the Here and Now: Advertising & App Experiences
The first opportunity is “improved advertising.” This is what Meta has already been doing and generating its great financial results from. The company essentially wants to make it as easy as possible for businesses to get customers.
Meta’s technology is learning how to show the right ad to the right person at the right time. As it gets better, advertisers are paying more money per ad, demonstrating the value they are receiving. The company’s AI ad creation tools also saw 30% more usage last quarter. This shows that the tools are likely making it easier for marketers to create ads.
The second opportunity is “more engaging experiences.” Essentially, Meta wants to increase the amount of time spent and the level of interaction with content on its apps. This would raise the value of advertising on Meta as users focus more on its apps than on other platforms. The company shares that improvements to its content recommendation systems have led to a 6% to 35% increase in time spent on its various apps.
Facebook started as a place where people shared mostly through written posts. However, image—and video-based content are far more engaging. Zuckerberg sees content progressing even further. People and the content they are watching will interact back and forth with each other in real time. He believes AI will be key in enabling the creation of this type of content. Seeing tangible examples of creators producing this type of content and successfully increasing engagement will be vital.
Emerging Opportunities: Messaging Monetization, Meta AI, AI Glasses
The next opportunity is “business messaging.” Billions of users and messages are sent across Meta’s WhatsApp, Messenger, and Instagram apps. However, messaging on these platforms is largely unmonetized at this point. Zuckerberg sees a future where companies generate sales through direct messaging customers. Companies in Thailand and Vietnam already do this extensively.
However, they use human employees because the labor cost in these countries is low. Companies can use AI agents to message people to make this profitable in developed countries. This could create a large monetization opportunity for Meta. Continued user growth is important as investors await more details on this front.
The fourth opportunity is Meta AI. This AI assistant was built into Meta’s apps and is now available as a standalone app. Meta AI now has almost 1 billion monthly active users. Ultimately, Zuckerberg wants to increase engagement as people talk to Meta AI and discover more content that interests them.
This can lead to opportunities to show personalized product recommendations. He also anticipates a premium service, presumably some type of subscription. He says it will continue growing the platform for at least a year before thinking about revenue generation. As with business messaging, increased users and engagement will be important to see going forward.
The final opportunity Zuckerberg outlined was “AI devices.” Specifically, he mentioned that glasses are the “ideal form factor” for AI and the metaverse. Zuckerberg believes that over the next five to ten years, many of the more than 1 billion people who wear glasses today will switch to AI glasses.
He mentioned that sales of the company’s Ray-Ban Meta AI Glasses tripled in the past year. It will be important to pay attention to seeing sales grow in this area and to see significant improvements in the technology.
What This All Means for Investors
Now that Meta has laid out this AI framework, evaluating the company’s performance becomes easier.
Investors should stay keenly aware of different metrics and commentary that indicate how well Meta is performing in each of these areas. When it comes to the emerging opportunities, investors also shouldn’t panic if results stagnate.
Zuckerberg notes that the company does not need to succeed in all these areas to succeed overall. Zuckerberg gave markets a clear score sheet to judge the company’s performance with. Now, it’s up to Meta to execute.
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