Meta’s business is continuing to print money even as it spends heavily on AI. That and other notes from today’s earnings call.
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Meta’s second quarter earnings continue the same story from the previous quarter: generative AI may be here, but it’s going to take a long time to make money.
The good news for Meta is that, unlike pretty much every AI startup, it already makes a lot of money. Last quarter, the company made just over $39 billion in revenue, up 22 percent from a year ago, and about $13.5 billion in profit, up 73 percent. 3.27 billion people use at least one of Meta’s apps every day. That kind of scale and money buys the ability to make big bets, which Zuckerberg is famous for doing.
On Meta’s Wednesday earnings call, CFO Susan Li reiterated to investors that financial returns from its recent AI investments will “come in over a longer period of time.” Zuckerberg was direct about why Meta is spending billions on Nvidia hardware and the other infrastructure ahead of these future returns: “It’s hard to predict how this will trend multiple generations into the future, but at this point, I’d rather risk building capacity before it is needed rather than too late.”
He again telegraphed that the Meta AI assistant is on track to be the most used in the world before the end of the year. While he touted that generative AI features “are things that I think will increase engagement in our products,” he said the real revenue will come from business use cases, like AI creating ads from scratch and letting businesses operate their own AI agents in WhatsApp for customer service.
Some other tidbits from the earnings call:
- Meta is already preparing to train Llama 4, which Zuckerberg wants to be the “most advanced” model in the industry when it comes out sometime next year. It will need almost 10 times more compute than Llama 3.1. (Jensen Huang probably owes Zuckerberg several leather jackets.)
- On the recent talks of Meta investing in the eyewear giant EssilorLuxottica: Zuckerberg didn’t say anything about an investment but said he is excited to build “future generations of AI glasses” after the early traction with the latest Meta Ray-Bans. Supreme/Meta smart glasses incoming?
- While the metaverse seems to have taken a backseat to AI at Meta in recent quarters, Zuckerberg did mention that sales of the Quest 3 are exceeding the company’s expectations, though he didn’t specify what those expecations were. Sources tell me a cheaper version of the headset is being announced at the company’s Connect conference in September.
- Threads is “about to hit” 200 million monthly users after posting 175 million at the beginning of July.
- Facebook is growing again with young adults, apparently: “The numbers we’re seeing especially in the US really go against the public narrative of who is using the app.”
