Meta profits soar but costs of AI cause worry

April 25, 2024 (MLN): Facebook-owner Meta on Wednesday said its quarterly profits soared last quarter, but worries about the cost of artificial intelligence saw its share price take a hit on Wall Street, as APP reported.

The company founded by Mark Zuckerberg said that net profit in the January to March period rose to $12.4 billion with total revenue, mainly from selling ads, up an impressive 27%, at $36.5bn.

"We estimate that more than 3.2bn people use at least one of our apps each day and we're seeing healthy growth in the US," Zuckerberg, who is also CEO, told analysts on an investor call.

According to analyst Debra Williamson of Sonata Insights, Meta's growth is due in particular to its sophisticated advertising tools and the success of "Reels", the algorithm-fueled short videos to be scrolled through in succession, copied from TikTok.

In another potential boost to its business, by the end of the year, Meta could also start selling advertising on Threads, its text message platform similar to X (formerly Twitter).

With ads on Threads, "advertisers who are looking to reach audiences during real-time moments will finally have a viable alternative to X," said Mike Proulx, vice-president at Forrester.

The rise in sales and profit continued Meta's rebound of 2023, which came thanks to drastic cost-cutting, including massive layoffs in what Zuckerberg dubbed the "year of efficiency" that saw tens of thousands of employees let go after a miserable 2022.

Meta said its global workforce now stood at 69,329, slightly more than last quarter, but down from a peak of more than 87,000 employees in 2022.

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