📈 Meta reported strong Q4 revenue growth of $40.1 billion, up 25% or 22% on a constant currency basis. # earnings
🚀 Meta’s focus on efficiency paid off, with a return to strong revenue growth and improved engagement across apps. 📈 # progress
🔬 Meta is investing heavily in AI research and infrastructure, including world-class compute infrastructure and open-source software. 🌐 # innovation
🤓 Meta’s Reality Labs segment had a successful quarter, with the release of Quest 3 and the launch of Ray-Ban Meta smart glasses. 📅 # success
💪 Meta expects to continue investing aggressively in AI and the metaverse, with a long-term vision of delivering revolutionary products and experiences. 🌟 # future
Meta Platforms, formerly known as Facebook, is a leading technology company that offers an array of products and services, primarily focused on social media and technology. The company’s main offerings include the Meta family of apps, which comprises Facebook, Instagram, WhatsApp, Messenger, and Reels, as well as hardware products like the Oculus Quest virtual reality headsets and Ray-Ban Meta smart glasses. Meta is also investing significantly in artificial intelligence (AI) research and development, aiming to create advanced AI models and services.
Recently, Meta’s products and services have seen strong performance. The Meta family of apps has continued to grow, with over 3.1 billion people using at least one of the apps each day. The company returned to strong revenue growth and saw increased engagement across its apps. In the fourth quarter of 2023, Meta reported $40.1 billion in total revenue, up 25% year-over-year. Meta’s Reality Labs segment, which includes its virtual and augmented reality products, also experienced strong sales during the holiday season. Quest 3, the latest VR headset, has had a strong start, and Meta announced that it will release an updated version of the Oculus Quest headset.
In the AI domain, Meta is making significant progress. The company is planning to provide everyone with a world-class AI assistant, creators with an AI that their community can engage with, businesses with an AI that their customers can interact with, and developers with a state-of-the-art open-source model to build with. Meta has announced the development of Llama 3, which is currently training and showing promising results. This focus on AI is expected to revolutionize the way people interact with technology and each other.
Furthermore, Meta is exploring new categories of computing devices like smart glasses that enable users to interact with AIs seamlessly. The company aims to develop full general intelligence to power its future services, which will be a major step forward in the AI industry.
In summary, Meta Platforms has seen strong growth and performance across its existing product line, including the Meta family of apps and Reality Labs hardware. The company’s new initiatives in the AI domain, such as the development of advanced AI models and services, hold significant promise and have the potential to revolutionize the way people interact with technology and each other. Meta’s focus on creating world-class AI products and services, as well as new categories of computing devices, sets the company up for continued success in the future.
The Meta Platforms’ future roadmap is centered around building the most popular and most advanced AI products and services. To achieve this, the company is focusing on several key areas.
First, Meta is investing in world-class compute infrastructure. By the end of this year, they will have about 350,000 H100s and including other GPUs, which will be around 600,000 H100 equivalents of compute. They are well-positioned to handle the increasing compute-intensive demands of future models.
Second, they are prioritizing open-source software infrastructure. Their long-standing strategy has been to build an open-source general infrastructure while keeping specific product implementations proprietary. Open-source software is typically safer and more secure, more compute-efficient to operate, and often becomes an industry standard. Meta’s open-source approach has unlocked a lot of innovation across the industry.
Third, they are taking a long-term approach towards the development of AI. While they are working on today’s products and models, they are also researching and developing the next generations of AI. They believe having clear product targets is essential for focusing their work and building the leading research program. Meta has been working on general intelligence research for over a decade and plans to make it the theme of their product work as well.
Fourth, they plan on learning from unique data and feedback loops in their products. They have a significant amount of data and a large user base, which gives them an advantage in improving their AI systems quickly. They have seen strong growth in Reels and Video overall, with daily watch time across all video types growing over 25% year-over-year in Q4. They are unifying their video experiences and ranking across the app, creating a more seamless user experience and delivering increasingly relevant video recommendations.
Fifth, there are a few major risks Meta may face in the future, including regulatory headwinds, geopolitical risks, and the uncertain technology landscape. To mitigate these risks, Meta plans on maintaining a lean organization and keeping their cost structure low to have the flexibility to surge investment when necessary.
In summary, Meta Platforms’ future roadmap includes investing in world-class compute infrastructure, prioritizing open-source software infrastructure, taking a long-term approach towards the development of AI, learning from unique data and feedback loops in their products, and maintaining a lean organization to mitigate risks and have the flexibility to invest when needed. The company is focused on building the most popular and most advanced AI products and services, and they are confident that their strategy will enable them to achieve their ambitious long-term goals.
Two of the most interesting questions from the Meta earnings call are:
Mark Zuckerberg responded that improvements for advertisers include creating engaging on-platform ad experiences, making it easier for advertisers to connect with their marketing data, and using AI in important ways across their ads platform. He added that they are investing in larger and more advanced models that have resulted in more accurate predictions of relevant ads for people and improved performance for advertisers.
Susan Li added that the first quarter revenue guide reflects strong, broad-based advertising demand across verticals, particularly within online commerce and gaming, and the improvements from all of their investments in improving ad performance over time.
Mark Zuckerberg responded that the year of efficiency was focused on making Meta a stronger technology company by becoming leaner and more balanced towards engineering work, and improving financial performance to provide stability and flexibility for long-term goals around AI and the metaverse. He emphasized the importance of keeping the company lean even as it grows, as it allows for more focus and better execution.
Susan Li added that the increase in the top end of the capital expenditures range reflects an evolving understanding of how much capacity they may need to support the development of large foundation models and associated product development in the years ahead. She emphasized that the actual investment would depend on both supply and demand factors, and that they will continue to closely monitor these factors as they make decisions about capital expenditures.
Buy Argument: Meta Platforms’ strong financial position and significant investments in AI and Reality Labs provide a solid foundation for future growth. The company’s large and engaged user base across its Family of Apps offers a competitive advantage, and its focus on creating engaging on-platform ad experiences and leveraging AI across its ads platform has resulted in strong performance and positive feedback from advertisers. With a clear product vision and a long-term focus, Meta Platforms is well positioned to capitalize on emerging trends and opportunities in the tech industry.
Sell Argument: The increasing regulatory and geopolitical headwinds facing Meta Platforms present significant risks to its business and financial results. The FTC’s efforts to impose additional restrictions on the company’s operations could have an adverse impact if unsuccessful in contesting the matter. Additionally, the company’s heavy investment in long-term initiatives such as AI and Reality Labs may weigh on near-term profitability. With mounting competition and potential regulatory challenges, investors may want to consider selling Meta Platforms stock until the regulatory landscape becomes clearer and the company demonstrates more consistent profitability.
