On Tuesday Facebook mother meta (META) announced that it will lay off another 10,000 employees. The move is part of CEO Mark Zuckerberg’s so-called “Year of Efficiency,” during which the company is cutting spending in the face of falling digital ad revenue and rising interest rates.
But buried in Zuckerberg’s statement on the layoffs was a clear message to both Silicon Valley and Wall Street: Artificial intelligence is now as important to the company as the Metaverse.
The reason? If Meta can grow its AI capabilities, it could find itself back in Wall Street’s favor and earn the capital it needs to fuel its Metaverse ambitions for years to come.
Do you need proof of relocation? A quick look at Zuckerberg’s Facebook post announcing the layoffs will tell you how important AI is to the company’s future. While discussing how Meta is investing in future technologies, Zuckerberg said, “Our biggest single investment is pushing AI forward and building it into every product we sell.”
And while he did mention Meta’s work on the Metaverse twice in his statement, it was only after he spoke about the company’s AI efforts.
“We pioneer a wide range of advanced technologies and then distill them into inspiring products that improve people’s lives,” Zuckerberg wrote.
“We [invest in] AI to help you express yourself creatively and discover new content, with the Metaverse to provide a realistic sense of presence, with new media formats to create richer experiences, with encryption so you can communicate privately in more and more ways , and help with business tools to reach customers, create opportunities and boost the economy.”
Part of the reason for the AI love is the hype surrounding the topic, fueled by OpenAI’s ChatGPT, Microsoft’s Bing (MSFT), and Google’s Bard (GOOG, GOOGL). However, the other half of the equation is Meta’s need to continue competing with rival TikTok.
This company, facing its own existential problems, including a possible ban by the Biden administration, has made its bones about its AI-powered For You page, which brings you a never-ending stream of addictive short videos. And Meta is working hard to ensure it can match those abilities.
“One thing that’s crystal clear is that AI and the metaverse are at the heart of Meta’s long-term strategy,” Mike Proulx, Forrester’s VP and research director, told Yahoo Finance. “But the subject remains in the here and now; There is only so much runway left that the company can deliver.”
Meta was stung for its massive investment in Zuckerberg’s plan to transform the company into a Metaverse First business. This includes the research and development of everything from the headsets needed for that vision to the software that runs the apps.
2021, Meta reported a loss of $10.1 billion from its Reality Labs business, which houses the company’s Metaverse efforts. 2022, that jumped to $13.7 billion.
However, a greater emphasis on AI will allow Meta to reassure investors while continuing to pour money into its ambitions in the Metaverse. Especially since the metaverse is expected to be years away from being a bankable reality, if ever.
“[Zuckerberg is] looking to invest in projects that can drive growth,” Gene Munster, managing partner of Deepwater Asset Management, wrote in a recent statement.
“Gone is the NFT experiment. More investment is being made in AI to improve Reels recommendations and advertising measurement tools, inject large language model (LLM) capabilities into messaging, and automate ad campaigns with creative content generation,” he said.
In other words. Meta is now a Metaverse and AI company. At least for now.
Do you have a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
Click here for the latest technology business news, reviews and useful articles on tech and gadgets
Read the latest financial and business news from Yahoo Finance
Source : finance.yahoo.com