Meta to Increase AI Spending in 2025

Meta Platforms executives told investors to expect a significant increase in spending on AI projects next year. CEO Mark Zuckerberg claims that the segment was already making strong progress with its intelligent assistant on track to be the most used globally by the end of the year.

Alongside apparent progress with its Meta AI assistant, in its Q2 earnings statement, the company highlighted the release of its latest open-source AI model and traction for its eyewear venture with EssilorLuxottica in the smart eyewear market. On the associated earnings call, Zuckerberg said the use of AI was providing enhancements to its big-name social media apps, with better recommendations driving engagement and claimed the technology would significantly evolve our services for advertisers.

For clients, the company notes with AI they got to the point where the current ads system could better predict who would be interested than the advertisers could themselves, with the added benefit its system would eventually be able to create content for the ads too. The company’s ongoing work in the sector includes tools specific to Meta’s family of brands and for third parties, including offerings for developers and businesses. It is also working on the next generation of its Llama open-source foundation AI model.

However, its research in AI and elsewhere is not coming cheap. In its financial outlook, CFO Susan Li estimated its 2024 full-year Capex to be in the $37 billion to $40 billion range with this figure set to rise moving forward. “While we continue to refine our plans for next year, we currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts,” she added.

Elsewhere, the company is continuing to hemorrhage cash in its Metaverse-focused Reality Labs division. “We continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and investments to further scale our ecosystem,” noted Li.

In Q2 alone the division booked an operating loss of $4.5 billion. The unit had a 21% increase in expenses to $4.8 billion and had revenue of $353 million, up 28% largely on Quest VR headset sales. However, the top and bottom lines were positive for Meta Platforms as a whole. Across the business, revenue was up 22% to $39.1 billion with boosts in its advertising impressions and price per ad. Net income was $13.5 billion, up 73%.