In This Article:
(Bloomberg) -- Meta Platforms Inc. said that a recovery in advertising will drive revenue growth at the fastest rate since 2021, helping Chief Executive Officer Mark Zuckerberg rekindle investor support for his longer-term ambitions.
Most Read from Bloomberg
-
Charles Koch-Tied Group Seeks to Block Trump From GOP Nomination
-
US, Europe Growing Alarmed by China’s Rush Into Legacy Chips
-
Asia’s Richest Families Fuel Race for Lucrative Finance Jobs
Meta’s revenue could grow as much as 20% in the current quarter, the company said Wednesday. That’s a pace the social media giant hasn’t seen since before the sluggish post-pandemic economy and a privacy rule change from Apple Inc. led to the worst rout in Meta’s digital ad sales in history. Revenue declined for the first time ever last year, prompting investors to lose patience in Zuckerberg’s spending outside of the core business.
After cutting thousands of employees and improving efficiency of the advertising business through artificial intelligence, Zuckerberg is now on stronger footing with his shareholders. Even news that expenses will continue to climb over the next two years didn’t dampen the shares, which rose more than 7% in after-market trading following the earnings report.
“We think return on investment is becoming more clear,” said Dan Salmon, an analyst with New Street Research LLC, who recently upgraded the stock to “buy.”
Read More: Meta to Charge Cloud Providers for AI Tech That It Said Was Free
Meta’s advertising acceleration and leaner business may provide the air cover Zuckerberg needs so he can continue spending on artificial intelligence and his far-off vision for the metaverse, a virtual-reality world the CEO expects everyone to embrace one day. On a call after the report Wednesday, executives promised to remain careful about spending and priorities.
“We expect to bring the discipline and habits that we built during this year of efficiency with us as we plan for the future,” Chief Financial Officer Susan Li said. “At the same time, we remain focused on investing in the significant opportunities ahead. This is particularly true in the areas we see the most significant opportunity, which include AI and the metaverse.”
Meta reported revenue of $32 billion for the second quarter, beating analyst estimates of $31.1 billion. Zuckerberg and Li made sure to associate their plans to increase spending with improvements in the core business.
“We see a host of opportunities Meta can capitalize on to monetize AI,” said Angelo Zino, an analyst at CFRA. That includes improving recommendations and ranking, and using generative AI to create new products.