Analyst Explains How Meta (META) AI Investments are Paying Off

Core Insights - Meta Platforms Inc (NASDAQ:META) is experiencing significant benefits from its investments in artificial intelligence, with revenue per employee increasing nearly 70% due to improved user and advertiser experiences [2] - The company has a substantial user base of approximately 3.48 billion daily active users, which provides a competitive advantage in ad targeting and monetization [2] - Digital advertising constitutes about 98% of Meta's total revenue, with a 9% year-over-year increase in price per ad in the June quarter, indicating a favorable market environment [2] - Despite the current success, there are concerns about a slowdown in digital advertising growth, projected to decline from 20% annually (2014-2019) to 9% per year from 2025 to 2030 [2] - Meta plans to invest between $60 billion to $65 billion in capital expenditures in 2025 to enhance its AI infrastructure, necessitating demonstrable results to unlock shareholder value [2] - The company’s Reality Labs division is focused on augmented and virtual reality hardware, contributing to its advertising capabilities [3] - Meta's Family of Apps averaged 3.4 billion daily active users in March 2025, underscoring its scale in the advertising market [3] - New initiatives, such as advertising on WhatsApp, are expected to create additional revenue streams, supported by a strong balance sheet that includes a quarterly dividend [3] - Recent fiscal results exceeded expectations, leading to a rise in shares, with management guiding for higher revenue in the second quarter while reducing full-year expense guidance [3]