Meta Platforms Inc, the parent company of Facebook, Instagram and WhatsApp. Reported its first-quarter earnings on Wednesday, April 27, 2023, and surprised analysts and investors with its strong performance and outlook. The company’s shares soared 11% on Thursday, adding nearly $60 billion to its market value.
Meta’s revenue rose 3% year-over-year to $28.6 billion, beating expectations for a slight decline to $27.7 billion. The company also forecast revenue in the current quarter of between $29.5 billion and $32 billion. Above expectations for a rise to $29.46 billion.
The company attributed its return to growth to its investments in artificial intelligence (AI). Which helped to boost user engagement and ad sales across its apps. Meta’s CEO Mark Zuckerberg said AI was driving good results across the company’s products and business.
“We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision” he said.
Meta has been focused on improving its AI capabilities and infrastructure. As well as pursuing its ambitious bet on the metaverse, a virtual environment where people can interact through digital avatars. The company has also faced regulatory scrutiny, inflationary pressures and macroeconomic challenges that have weighed on its advertising business.
However, Meta’s results showed that the company was able to overcome these headwinds and deliver strong growth in its core platforms. The company reported 2.97 billion monthly active users across its family of apps, up 8% year-over-year. The average revenue per user increased 9% year-over-year to $9.64.
Meta’s AI efforts have helped to improve the quality and relevance of the content and ads that users see on its platforms. As well as to streamline its internal processes and reduce costs. The company said, AI was behind the success of products such as Reels. A short-form video feature on Instagram that competes with TikTok, and Shops, an e-commerce platform that connects merchants and customers.
Meta also said AI was enabling new innovations such as Horizon Worlds, a social virtual reality platform that is part of the company’s metaverse vision. Meta said it was investing heavily in building out its metaverse infrastructure and content, as well as in developing new technologies such as augmented reality glasses and neural interfaces.
Meta’s earnings report impressed analysts and investors, who raised their price targets and ratings on the stock. Meta’s shares rose to $240.50 in premarket trading on Thursday, up from $216.34 at Wednesday’s close.
Meta’s strong performance also lifted other tech stocks, such as Snap Inc, Pinterest Inc and Amazon.com Inc, which rose by as much as 3.3%. Meta’s rivals Google and Microsoft also reported robust earnings earlier this week, showing resilience in the face of a challenging environment for the tech sector.