Meta boss Mark Zuckerberg spoke glowingly about the company’s ambitions for artificial intelligence as the Facebook and Instagram parent reported a stronger-than-expected quarter — despite its metaverse division losing nearly $4 billion.
Zuckerberg spent six minutes of his opening remarks talking about Meta’s AI projects during the company’s first-quarter earnings call on Wednesday – compared to just 90 seconds on the metaverse, according to Bloomberg.
“It’s been a pretty amazing year of progress on this front, and the work happening now is going to impact every single one of our apps and services,” Zuckerberg said regarding Meta’s push into AI technology.
“I think there’s an opportunity to introduce AI agents to billions of people in ways that will be useful and meaningful,” Zuckerberg added, noting that Meta is exploring potential implementations of AI technology ranging from customer service to “chat experiences” in its WhatsApp and Messenger apps.
The tech giant reported first-quarter revenue of $28.65 billion and earnings per share of $2.20. Both figures beat analysts’ projections.
Meta shares surged nearly 15% in early trading on Thursday.
During the conference call, Zuckerberg pushed back on assertions that the company is putting the metaverse on the backburner — after a lukewarm reception from investors and the public — in favor of developing AI.
“A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say upfront that that’s not accurate. We’ve been focusing on both AI and the metaverse for years now, and we will continue to focus on both,” he said.
Zuckerberg said Meta’s work on AI is divided into two key areas – a “massive recommendations and ranking infrastructure” tied to core features such as feeds, Instagram Reels and digital ads, and “new generative foundation models” that are enabling entirely new classes of products and experiences.
A notable example of a tool powered by so-called “generative AI” is ChatGPT, the immensely popular chatbot released last year by Microsoft-backed OpenAI.
User time spent on Instagram has increased by more than 24% — a trend Zuckerberg attributed to AI-powered recommendations for Reels, the company’s answer to TikTok’s video feed.
Zuckerberg’s metaverse push was a weak point in an otherwise strong slate of quarterly results.
For the quarter, Meta’s Reality Labs division – the segment that includes its metaverse unit – lost $3.99 billion. The division generated revenue of just $339 million – down 51% compared to the same quarter one year ago.
“We continue to expect Reality Labs operating losses to increase year-over-year in 2023,” the company said in its earnings release.
Zuckerberg had rankled some investors last year who grumbled the company was overspending on the metaverse to the detriment of its core social media business. Meta lost $13.7 billion through its Reality Labs unit last year.
This year, Zuckerberg has embarked on a “year of efficiency” that will include more than 21,000 layoffs through this year and other cost-cutting measures, even as the company pushes forward on AI.
“After this is done, I think we’re going to have a much more stable environment for employees,” Zuckerberg said.
“And then for the rest of the year, I expect us to focus on improving our distributed work model, delivering AI tools to improve productivity, and removing unnecessary processes across the company,” he added.