Sales of Instagram and Facebook adverts soared this spring, delivering a surge in profits for parent company Meta.
The company said revenue rose to more than $39bn (£30bn) in the three months to June, up 22% on the same period last year, as it charged more for adverts and the commercials reached more people.
Profits jumped to nearly $13.5bn despite huge levels of investment in its artificial intelligence (AI) projects.
The group also recently agreed to pay a $1.4bn settlement to the US state of Texas over allegations it collected user facial data and other information without proper consent.
On Wednesday, Meta founder and chief executive Mark Zuckerberg said that it had seen a “strong” quarter and suggested that its AI system is “on track to be the most used AI assistant in the world by the end of the year”.
Meta has been spending huge amounts on AI as well as augmented and virtual reality products such as its headsets which let users “jump into” their favourite games or exercise classes.
The reported profit came despite its Reality Labs unit which develops such products losing $4.5bn – more than analysts had expected.
Mr Zuckerberg and other tech executives at the likes of Google, Microsoft and OpenAI have been locked in a battle to create powerful AI tools
Meta warned on Wednesday it expects to spend as much as $40bn this year on developing AI products and that higher spending would continue in 2025.
“Any apprehensions investors may have had about Meta’s spending on AI and the metaverse are likely to be allayed by this quarter’s results,” suggested eMarketer principal analyst Max Willens.
“Meta’s careful introduction of ads on Reels has led to a perfect storm of rising impressions and rising ad prices.”
Reels is a short video sharing service Meta introduced in a bid to challenge TikTok, which faces a potential ban in the US under a new law poised to take effect.
Meanwhile, analyst Mike Prolux said Meta was “well positioned” to deliver on AI tools.
He pointed out, however, that while the Facebook and Instagram parent company may “boast” about its AI assistant becoming the most used in the world, users of Instagram, Messenger and WhatsApp must use it because it provides the search bar on those apps.
“In a way it’s a smart move by the company to, effectively, introduce Meta AI to its users by forcing them to use it,” he said.
While the company has been spending huge amounts on AI and Metaverse developments, pushed on by Mr Zuckerberg himself, it has been looking to cut costs elsewhere and has cut thousands of posts.
Meta said its global workforce now stood at 70,799, down from a peak of more than 87,000 employees in 2022.
In a call following the earnings update on Wednesday though, its chief financial officer Susan Li said at the end of 2024 its headcount would be “meaningfully higher” when compared with the year before.