Advancing AI: Meta’s Top Investment Priority

Meta, formerly known as Facebook, has announced that its top investment priority is now advancing artificial intelligence (AI). This decision comes roughly a year and a half after the company announced its plans to build the metaverse, which is a future version of the internet. In a letter to staff on Tuesday, CEO Mark Zuckerberg announced that the company will be laying off another 10,000 employees in the coming months, with a focus on the efficiency of the company.

Cutting Costs and Streamlining Projects

The pivot to efficiency comes after years of investing heavily in growth, including in areas with unproven potential like virtual reality. Now, the company will focus mostly on cutting costs and streamlining projects. Although building the metaverse remains central to defining the future of social connection, Meta will not be putting most of its capital into it. Instead, Meta’s single largest investment is in advancing AI and building it into every one of their products.

Benefits of AI Investment

Zuckerberg has stated that AI tools can help users of its apps express themselves and discover new content. Moreover, new AI tools can be used to increase efficiencies internally by helping engineers write better code faster. The company’s investment in AI has benefits on both ends because it can improve efficiency for engineers creating products, and incorporating AI features into Meta’s lineup of apps will potentially create more engagement time for users, which can then drive advertising revenue.

AI Frenzy in the Tech World

Meta has been involved in AI research for years, but the recent remarks come amid a heightened AI frenzy in the tech world. This frenzy was kicked off in late November when Microsoft-backed OpenAI publicly released ChatGPT, a technology that can generate compelling, human-sounding responses to user prompts. This event kicked off an apparent AI arms race among tech companies, with Microsoft incorporating the tech behind ChatGPT into its search engine, Bing, and Google unveiling its own AI-powered tool called Bard. Not to be left behind, Meta announced last month that it was forming a “top-level product group” to “turbocharge” the company’s work on AI tools.

A Shift in Focus

Investors have previously griped at the company’s metaverse ambitions and spending. In 2022, Meta lost more than $13.7 billion in its “Reality Labs” unit, which houses its metaverse efforts. However, after taking a beating in 2022, shares for Meta have surged more than 50% since the start of the year. The shift in focus from the metaverse to efficiency is also “what the shareholders and the market want to hear,” according to Ali Mogharabi, a senior equity analyst at Morningstar. Many investors welcome Zuckerberg’s emphasis on investing in AI and using its tools to make the company more efficient and boost its bottom line.

In Conclusion

Meta’s decision to prioritize advancing AI comes amid a heightened AI frenzy in the tech world. Although building the metaverse remains central to defining the future of social connection, Meta’s single largest investment is now in AI. This shift in focus from the metaverse to efficiency has been welcomed by investors and the market, and Meta’s investment in AI has benefits on both ends. With the rapid pace of AI development, it will be interesting to see how Meta’s investment in this technology will shape the company’s future.