Meta’s Bold Strategy: Massive investments focus on long-term gains 

Meta has signaled a long-term AI strategy focusing on significant investments rather than immediate revenue. During the Q2 earnings call, CEO Mark Zuckerberg outlined Meta’s vision, emphasising the need for extensive computational resources for their AI initiatives. Meta is preparing for future AI demands, specifically planning for Llama 4, which will require nearly ten times the computing power of its predecessor, Llama 3, which used 16,000 GPUs. Zuckerberg aims for Llama 4 to be the industry’s most advanced model next year.

Meta’s AI development involves substantial financial commitment, with projected capital expenditures of $37 to $40 billion for the year, an increase of $2 billion from previous estimates. Investors were cautioned about further significant capital expenditure increases next year. CFO Susan Li noted that Meta does not expect revenue from generative AI this year despite these investments. The company is building a flexible AI infrastructure to allow capacity adjustments for optimal use cases. The hardware used for AI model training can also be adapted for inferencing, ranking, and recommendations.

Meta’s current AI efforts, termed “Core AI,” are already enhancing user engagement on Facebook and Instagram. Zuckerberg highlighted the success of a new video recommendation tool for Facebook, which has significantly increased engagement on Facebook Reels. Zuckerberg envisions AI revolutionising Meta’s advertising business by creating and personalising ad copy, potentially enabling advertisers to provide a business objective and budget while Meta’s AI handles the rest.

Despite these investments, Meta remains financially strong, with Q2 revenue of $39 billion and net income of $13.5 billion, showing significant year-over-year growth. Meta’s user base exceeds 3.2 billion daily users, and its Threads platform is nearing 200 million active monthly users. Meta’s strategy reflects a long-term vision prioritising technological advancement and infrastructure development over immediate financial returns.