Facebook’s parent company, Meta, announced a return to sales growth after three quarters of decline, sending its shares up 12 percent and paving the way for it to move forward with its big bet on artificial intelligence.
The parent company of the platforms, including Facebook, Instagram and WhatsApp, added more than $50 billion to its after-hours market capitalization, following Wednesday’s earnings showed signs of recovery in its advertising business.
The company reported revenue of $28.6 billion, up 3 percent from a year earlier and ahead of expectations of $27.7 billion.
That cut Meta’s three-quarter decline in revenue, the only time since the company went public in 2012.
Shares rose more than 12 percent in after-hours trading, and the company also forecast second-quarter revenue could reach $32 billion.
The 3 percent increase is an improvement from the 4.5 percent decline in revenue recorded by the company in the fourth quarter of 2022, suggesting that Meta’s massive investment in AI tools to improve ad targeting systems is doing well.
The company also reported a net profit of $5.7 billion for the first quarter. That represents a decline of about 24 percent from the same period last year, but up from $4.7 billion in the first quarter of October to December.
Meta has alarmed investors as advertisers’ spending has fallen amid CEO Mark Zuckerberg’s expensive bet on the Metaverse.
The company previously announced a major restructuring, including leveling the management structure and laying off about 20,000 employees, in what Zuckerberg called the “Year of Efficiency.”
Speaking to analysts, Zuckerberg said: “When we started this business last year, our work wasn’t doing as well as we should. But now we are increasingly doing this work from a position of strength.”
Meta, like its peers in big tech companies, was racing for an edge in AI operations.
Zuckerberg on Wednesday outlined his vision for using the technology, with Meta directing investment in deploying AI tools to make its platform more attractive and advertising more effective, as well as to streamline internal processes.
Amid the growing hype about AI capabilities, Zuckerberg said Meta is working on new AI-powered features such as “visual creation tools” for Instagram and “AI agents” for business messages.
Meta shares fell by about two-thirds in 2022, wiping more than $600 billion off market capitalization. The company warned last year that changes to Apple’s policy alone would translate into a $10 billion sales loss.
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