Meta’s Goal is to Improve AI, Not Metaverse

Meta says its single biggest venture is currently in propelling Artificial intelligence

The tech giant now says that advancing artificial intelligence will be its top investment priority, roughly a year and a half after it changed its name to "Meta" and said It would commit to building the "metaverse," a future internet version.

CEO Mark Zuckerberg reiterated his new focus on the company's "efficiency" in a letter to employees on Tuesday. In the letter, he also announced plans to lay off another 10,000 employees in the coming months. After years of heavily investing in growth, including in areas with unproven potential like virtual reality, Meta's shift toward efficiency was first made public last month during its quarterly earnings call.

Zuckerberg claims that the company will now concentrate primarily on streamlining projects and reducing expenses. Zuckerberg wrote that building the metaverse "remains central to defining the future of social connection," but Meta will not spend most of its money there. Meta's goal is to improve AI.

Zuckerberg stated on Tuesday that "our single largest investment is in advancing AI and building it into every one of our products." He gestured to how simulated intelligence devices can help clients of its applications communicate their thoughts and "find new happy," yet, in addition, said that new man-made intelligence apparatuses can be utilized to increment efficiencies inside by making a difference "engineers compose better code quicker."

The CEO said that the "world economy changed, competitive pressures grew, and our growth slowed considerably" last year, which he called a "humbling wake-up call."

The remarks come amid a heightened AI frenzy in the tech world, which was sparked by the public release of ChatGPT by Microsoft-backed OpenAI at the end of November. Although Meta and its predecessor Facebook have been involved in AI research for years, due to its capacity to generate compelling, human-like responses to user prompts, the technology quickly went viral and sparked an apparent AI arms race among tech companies. Beginning in February, Microsoft announced that the technology behind ChatGPT would be incorporated into Bing, its search engine. Google unveiled Bard, its AI-powered tool, a day before Microsoft did. In addition, Meta announced late last month that it would establish a "top-level product group" to "turbocharge" the company's AI tool development efforts.

Ali Mogharabi, a senior equity analyst at Morningstar, told CNN about Zuckerberg's remarks, "I do think it is a good thing to focus on AI." Mogharabi said that Meta's investments in AI "have benefits on both ends" because they can make product engineers more efficient and because incorporating AI features into Meta's app lineup might make users spend more time engaged, which could lead to more advertising revenue.

"A lot of the investments in AI, and a lot of enhancements that come from those investments in AI, could apply to the entire metaverse project," Mogharabi added.

Mogharabi stated, however, that Zuckerberg's emphasis on investing in AI and utilizing the buzzy technology's tools to boost the company's efficiency and profitability is also "what the shareholders and the market want to hear." The company's metaverse ambitions and expenditures had previously alarmed a large number of investors. In 2022, Meta's "Reality Labs" division, which houses its metaverse endeavors, suffered losses totaling more than $13.7 billion.

What's more, financial backers seem to invite Zuckerberg's change in the center from the metaverse to productivity. Since the beginning of the year, Meta's shares have increased by more than 50%, despite suffering a setback in 2022.

The second round of layoffs at Meta "officially makes us convinced that Mark Zuckerberg has completely switched gears, altering the narrative of the company to one focused on efficiencies rather than looking to grow the metaverse at any cost," according to Angelo Zino, a senior equity analyst at CFRA Research, on Tuesday.