Companies like Meta that could tout their work in the fast-growing field saw a benefit in their fourth-quarter results — and won praise from eager investors.
A.I. and cost cuts lift Big Tech
Earlier this week, Mark Zuckerberg of Meta endured a grilling on Capitol Hill and publicly apologized to relatives of victims of online abuse. Little more than a day later, he had a lot to crow about, as his business delivered some of its best quarterly earnings in years.
Meta’s results illustrate how the most recent earnings season has gone for Big Tech: a mostly positive period in which companies that could claim the benefits of artificial intelligence and cost-cutting were hailed the most on Wall Street.
Meta shot the lights out. After years of facing questions about its ad business and its ability to cope with scandals, the parent of Facebook and Instagram reported that fourth-quarter profits tripled from a year ago. A.I. was credited for some of that, with the technology helping make its core ad business more effective. So too was cost-cutting, which included tens of thousands of layoffs as part of the company’s self-described “year of efficiency.”
Meta’s profit was so good that the company will soon start paying stock dividends for the first time (which could total $700 million a year for Zuckerberg alone) and announced a $50 billion buyback. It’s a sign that the tech giant is “coming of age,” according to one analyst, joining Microsoft and Apple in making regular payouts to investors.
Zuckerberg pledged more investment in A.I. — “Expect us to continue investing aggressively in this area,” he said on an earnings call — and the company said it had largely concluded its cost cuts. But some analysts said that Meta will eventually have to show a return on that spending.
Amazon also touted its A.I. initiatives. Much of its earnings call was spent talking about Rufus, a new smart assistant intended to help shoppers find what they’re looking for. (It may also allow Amazon to reduce ad spending on Google and social media platforms.)