Meta reported strong ad revenue in Q1, but AI investments worry investors

Not even Zuck’s swagged-out rebrand could get Meta investors hyped for the future.

Despite exceeding expectations and reporting $36.5 billion in revenue this quarter—27% up YoY due largely to a 20% jump in ad impressions and a 6% increase in price per ad—the company lost $200 billion in value after releasing its Q1 earnings.

The reason for the dip? Meta reported that it expects future growth to slow and expenditures to be higher than anticipated this year due to its increased investments in AI, which could take “several years” to pay off.

Betting on AI: On Meta’s earnings call Wednesday, CEO Mark Zuckerberg noted that Meta has “historically seen a lot of volatility” in its stock price during product-building phases, comparing its AI investments to those it put into Reels and Stories.

“Once our new AI services reach scale, we have a strong track record of monetizing them effectively,” he told investors on the call.

Zuckerberg shared ideas for monetization that included “introducing ads or paid content into AI interactions.” The Wall Street Journal noted that Meta has already benefited from using AI in ad targeting, helping it to “overcome challenges posed by privacy changes implemented by Apple that erased $10 billion of revenue for the social media company in 2022.”

But not every AI idea is a guaranteed winner. Last week, Meta added its AI assistant into Instagram, Facebook, Messenger, and WhatsApp search bars—which is so far not to everyone’s liking, it seems, given how some users are looking for ways to bypass it or turn it off.

The metaverse lives on: As headset competitors like Apple Vision Pro have emerged, some marketers have indicated that they’re moving on from the Metaverse. Zuckerberg, however, seems bullish on the technology, calling it a “long-term focus,” even though the company’s virtual reality investments also have yet to pay off. He emphasized Meta’s AR glasses, which he hopes one day will integrate “full holographic displays.”

Don’t sleep on Threads? Meta’s text-based app created to rival X is currently surpassing it in daily active users in the US, according to recent info from data intelligence platform Apptopia. Zuckerberg noted on the call that the platform now has more than 150 million monthly active users, including Taylor Swift.