Meta✴ shares hit an all-time high after Mark Zuckerberg made a compelling case for the benefits of AI at a recent earnings call, boosting investor confidence and sending the company’s stock higher.
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Shares of Meta✴ have risen 13% this month, significantly outperforming other tech giants, despite another surge in AI capital spending and promises to increase it in the future. Shares rose 1.7% on Thursday, hitting a record high of $544.23.
According to Bloomberg, the secret of this success is that Zuckerberg managed to convince investors that artificial intelligence helps improve results in the company’s core business – digital advertising. Other Big Tech companies, such as Amazon, Microsoft and Alphabet, have failed to articulate the benefits of AI to their businesses as clearly.
«It was his best earnings report as CEO,” said Gene Munster, managing partner at Deepwater Asset Management. “He explained the short-term and long-term benefits of AI, as well as the timeline for implementing all plans. It was convincing.”
Zuckerberg explained that Meta✴ uses AI to improve the efficiency of advertisers in targeting audiences, which directly impacts the company’s main source of revenue. In addition, Meta✴ uses proprietary Large Language Models (LLMs) to improve content recommendations, which helps increase user engagement on Facebook✴ and Instagram✴.
At the same time, investors have become more critical of the spending of other big technology companies. Shares of Google parent Alphabet underperformed after reporting earnings last month that showed higher-than-expected capital spending, even as earnings and revenue topped forecasts. The same could be said for Microsoft after its results showed slower growth in its Azure cloud computing business.
Alphabet shares fell 9% after reporting earnings on July 23, while Microsoft shares were little changed since reporting results on July 30. “Google basically said in its report, well, we need to spend money to keep up with everyone else, which didn’t look very convincing,” said Alec Young, chief investment strategist at Mapsignals. “Microsoft sold it a little better by putting it in different words.” But essentially they do the same thing.”
Global X ETFs investment analyst Andrew Ye said Meta✴ has and will continue to invest heavily in generative AI, but has apparently been able to articulate its vision for AI integration more clearly than its competitors.