Meta has not strayed far from the metaverse, AI is the future mainstream

The US tech giant Meta announced its Q1 2023 earnings report yesterday, with revenue of $28.6 billion, showing growth compared to the same period last year. This marks Meta's return to growth after a year, and following the financial report, Meta's stock price rose by 11.65% in after-hours trading to $233.79, reaching a new high in 15 months.

Cost Reduction Efforts Pay Off

The operating margin for this quarter has increased to 25%, although lower than the 31% from the same period last year, it is significantly higher than the 20% from the previous two quarters, indicating that Meta is gradually improving in cost reduction. Meta stated that if the restructuring costs related to layoffs were excluded, the operating margin would increase by an additional 4 percentage points.

Note: In March, Meta announced a restructuring plan that included laying off a total of 10,000 employees, accounting for approximately 10% of its global workforce. CEO Zuckerberg stated that this was to enhance company efficiency and strengthen product development capabilities.

Reality Labs Project Continues to Incur Losses

The highly anticipated Reality Labs project continues to incur losses. Reality Labs' mission is to lead the company into the metaverse through the development of virtual reality and augmented reality technologies.

In the last quarter, Reality Labs department reported a revenue of $339 million, a 51% decrease year-on-year, with an operating loss of $3.992 billion, although lower than the previous quarter. CFO Susan Li attributed this to lower-than-expected sales of Quest 2 and increased costs related to personnel restructuring. Despite the reduced mentions of the metaverse recently, Zuckerberg stated that the metaverse remains a key roadmap for Meta and the company has not deviated from it, as the metaverse is closely tied to the AI wave.

AI as the Future Trend

Another key point mentioned by Zuckerberg is the development of AI. AI provides the foundational infrastructure for a large amount of recommendations and rankings that support its main products, while the use of AI-generated foundational models makes it possible for entirely new product categories and experiences. Currently, over 20% of the content in Facebook and Instagram feeds is recommended by AI from people, groups, or accounts that users do not follow. AI recommendations have also led to an increase of over 24% in the time people spend on Instagram.

Zuckerberg also mentioned that Meta is exploring opportunities with AI agents, aiming to become an open tool that integrates with Meta's platform and products to help users create better experiences. Meta expects its capital expenditure for 2023 to reach $30-33 billion, primarily for the creation of generative AI and technical support.