The old saying is you’ve got to spend money to make money.
For Meta, notching a third quarter earnings report with record revenues, the fact remains that the long-term artificial intelligence (AI) roadmap will require as yet undefined billions of dollars of capital investments in the next year and beyond.
The read across might be that margins would feel a pinch, and investors sent the shares 3% lower in after-hours trading on Wednesday (Oct. 30).
The record came in the form of roughly $40.6 billion in sales, up 19% from a year ago.
As for the core businesses: Earnings supplementals noted that total advertising-related revenues came in at $39.9 billion, compared to $33.6 billion last year. Ad impressions delivered 7% growth year over year, where those growth rates had been as high as 21% a year ago, worldwide. The average price per ad was 11%, up slightly from the 10% in the second quarter. The firm reported a daily active user count of about 3.29 billion, up 5%.
CEO Mark Zuckerberg said on the conference call with analysts that pushing ahead with AI will be tied to “serious infrastructure.” That infrastructure will demand that the company “continue investing significantly” against a backdrop where the executive also said that the firm had not decided on a “final budget” yet.
2025 looms as a year where Zuckerberg and CFO Susan Li said on the call that 2024 capex will be around $38 billion to $40 billion, tightening the bottom end of the range. The forward guidance of $45 billion to $48 billion for the fourth quarter sales implies roughly 12% to 19% growth from the year ago period.
It must be noted that Meta’s stock has surged by double digits through the past year, and AI has been a focus on earnings calls and presentations.
That narrative continued on Wednesday night: Zuckerberg said that “parts of our long-term vision around AI and the future of computing [are] coming into sharper focus. We estimate that there are now more than 3.2 billion people using at least one of our apps each day, and we’re seeing rapid adoption of Meta AI and Llama, which is quickly becoming a standard across the industry.” He noted that Threads has evolved into a community with 275 million monthly active users — growing by more than 1 million signups daily.
“We are making a lot of progress with our AI efforts too, and we’re seeing AI have a positive impact on nearly all aspects of our work — from our core business engagement and monetization to our long-term roadmaps for new services and computing platforms,” Zuckerberg said. Meta AI has more than 500 million monthly active users, he said.
Improvements to AI-driven feed and video recommendations have led to an 8% increase in time spent on Facebook and a 6% increase on Instagram this year alone, said Zuckerberg, who added “more than a million advertisers used our GenAI tools to create more than 15 millions ads in the last month. And we estimate that businesses using image generation are seeing a 7% increase in conversions. … We believe that there’s a lot more upside here.
“Llama token usage has grown exponentially,” he said. The Llama 3 models, he said, represent an “inflection point” in the industry, but Llama 4 is “well into development.”
The company continues to lose money on its Reality Labs segment — home to virtual reality and augmented reality efforts — where revenues of $270 million were higher than $210 million a year ago, but the operating loss increased to $4.4 billion, up from $3.7 billion last year.
Zuckerberg said on the call that its Ray-Ban glasses have been doing well, and now have a Meta AI integration that helps users with suggestions as they are using the product — which he termed as “the ideal form factor for AI because you can let your AI see what you see, hear what you hear, and talk to you. Demand for the glasses continues to be very strong.”
CFO Li said that within ad revenues, “The online commerce vertical was the largest contributor to year-over-year growth, followed by health care and entertainment and media. … On Instagram, Reels continues to see good traction. And we’re making ongoing progress with our focus on promoting original content, with more than 60% of recommendations now coming from original posts in the U.S.”
Li pointed to the use of advanced models to monetize and enhance marketing performance.
“Similar to organic content ranking, we are finding opportunities to achieve meaningful ads performance gains by adopting new approaches to modeling. For example, we recently deployed new learning and modeling techniques that enable our ad systems to consider the sequence of actions a person takes before and after seeing an ad. Previously, our ad system could only aggregate those actions together, without mapping the sequence.” The company has seen as much as a 2% to 4% increase in conversions based on testing within selected segments, Li said.
“For Reality Labs, we continue to expect 2024 operating losses to increase meaningfully year over year due to our ongoing product development efforts and investments to further scale our ecosystem,” she said.
Zuckerberg emphasized the ways in which AI will be harnessed in the service of everything from daily task management to content creation. “In the next year, our goal around that is going to be to try to make these pretty widespread use cases, even though there’s going to be a multiyear path to getting the kind of the depth of usage and the business results that we want.”
Job cuts in government, technology and retail led the way as U.S. employers announced the largest number of cuts in one month since May 2020.
Among the 275,240 job cuts announced in March, 216,215 were in government, 15,055 were in technology and 11,709 were in retail, Challenger, Gray & Christmas said in a report released Thursday (April 3).
“Job cut announcements were dominated last month by Department of Government Efficiency (DOGE) plans to eliminate positions in the federal government,” Andrew Challenger, senior vice president and workplace expert for Challenger, Gray & Christmas, said in the report. “It would have otherwise been a fairly quiet month for layoffs.”
The total number of job cuts made in March was more than three times the 90,309 cuts announced in March 2024, according to the report.
By sector, compared to March 2024, government job cuts were almost six times higher, technology cuts were about 6% higher and retail cuts were nearly twice as high, per the report.
All the government job cuts made in March occurred in the federal government, the report said.
The top reason employers gave for cutting jobs in March was “DOGE impact,” which was cited for 216,670 of the month’s cuts, according to the report.
Other common reasons included store, unit or department closing, to which 17,666 job cuts were attributed, and market/economic conditions, which accounted for 11,594 cuts, per the report.
Challenger, Gray & Christmas also said in the report that employers are planning to hire fewer workers than they were a year ago. Companies’ hiring plans dropped by about 37%, from 21,102 in March 2024 to 13,198 in March 2025, according to the report.
The specter of uncertain job security may accelerate a spending pullback that is already in motion, PYMNTS reported Wednesday (April 2). Consumer confidence that was already shaken may have been further impacted by the Bureau of Labor Statistics’ latest snapshot of the labor market released Tuesday (April 1), which found that the labor market slowed in February, with a decline in job openings over the past year.
The Conference Board reported March 25 that consumer confidence slipped for the fourth straight month in March, due in part to a plunge in consumers’ short-term outlook for income, business and labor market conditions.
