Meta's AI spending: 3 reasons why it's worth it, analyst says
Shares of Meta (META) fell sharply Thursday, after the tech giant released its first quarter results and provided a softer outlook for the second quarter due to increased spending on artificial intelligence (AI) and operational investments. RBC Capital Markets Internet Analyst Brad Erickson joined the Morning Brief to discuss Meta's spending plan. Erickson views the pressure on the stock price following the report as an "overreaction." He notes that although Meta beat on revenue and guidance figures, "the issue was obviously cost." Despite the potential for increased costs, Erickson emphasizes that the company is "still very very focused" on controlling expenses. However, he highlights that the money spent will be invested in areas such as infrastructure for "product development in the future." Erickson notes Meta's investments into AI and operational spending serve three key purposes: First, it helps them develop "probabilistic models" to enhance the performance of ad campaigns. Second, it aids in recommending content, thereby improving the algorithm's effectiveness. Lastly, it increases "users' utility of Meta." Erickson believes that these factors contribute to future revenue growth, balancing out the increased spending. For more expert insight and the latest market action, click here to watch this full episode of Morning Brief. This post was written by Angel Smith
