AI Development - Meta is dividing its AI Superintelligence Labs into four divisions [1] - The four divisions will focus on research, infrastructure, and product development [1] - This restructuring aims to accelerate progress toward "superintelligence" [1]

AI Strategy - Meta is breaking up its AI lab as part of a push towards superintelligence [1]

Economists have been trying to think through how superintelligence could reshape the world. The picture that is emerging is perhaps counterintuitive and certainly mind-bogglingIllustration: Le Blue https://t.co/SVQQkDH8qO ...

Core Viewpoint - Meta's new AI initiative, aimed at developing superintelligence, could potentially disrupt Microsoft's business, particularly its productivity software segment [2][9]. Group 1: Meta's AI Initiative - Meta's CEO Mark Zuckerberg articulated a vision for "personal superintelligence" that aims to enhance individual capabilities and experiences [3][4]. - The company claims to be making progress in developing superintelligence, with indications that its AI systems are beginning to improve themselves [5]. - Zuckerberg suggested that if trends continue, people may spend less time on productivity software and more on creative and social activities [6][9]. Group 2: Microsoft's Business Impact - Microsoft's productivity and business processes segment generated $33.1 billion in revenue for the quarter ending June 30, 2025, accounting for 43% of its total revenue [7]. - A significant portion of this revenue is derived from productivity software, which is critical to Microsoft's business model [8]. - The potential decline in productivity software usage due to Meta's superintelligence could pose a risk to Microsoft's revenue and profits [9]. Group 3: Future Considerations - The impact of Meta's superintelligence on Microsoft largely depends on the success of Meta's initiatives, though skepticism exists regarding the feasibility of such predictions [11]. - A key distinction is made that while people may spend less time using productivity software, it does not necessarily mean that the software itself will be used less, as AI may continue to leverage these tools [12]. - The expectation is that both Meta and Microsoft can coexist and thrive, allowing long-term investors to remain optimistic [13].

Core Viewpoint - The article discusses the potential of Meta Platforms as a leading AI company among the so-called "Magnificent Seven" stocks, emphasizing its strong return on investment from AI initiatives and its leadership in AI glasses technology [1][2]. Group 1: AI Initiatives and ROI - Meta is experiencing a solid return on investment (ROI) from its AI initiatives, with a reported 5% increase in time spent on Facebook and a 6% increase on Instagram due to improvements in its AI-powered recommendation model [4] - The changes to Meta's recommendation model have also led to a 5% boost in ad conversions on Instagram and a 3% increase on Facebook in Q2 [4] - A significant portion of Meta's ad revenue is now generated from advertisers utilizing the company's generative AI capabilities, particularly benefiting smaller advertisers [5] - The company plans to continue investing heavily in AI, expecting compelling returns from these investments through 2026 [6] Group 2: AI Glasses Leadership - Meta has established itself as the market leader in AI glasses, with sales of Ray-Ban Meta glasses accelerating in Q2, indicating strong demand that outpaces production [7] - The company is also developing new products like the Oakley Meta HSTN performance AI glasses, which are expected to be commercially successful [7] - Meta's Orion prototype suggests future integration of augmented reality into its AI glasses, with hints of a smaller display being introduced before full AR capabilities [8] Group 3: Superintelligence Investment - Meta is investing in the development of superintelligence, aiming to lead in artificial general intelligence (AGI) technology [9] - The company is focused on assembling small, talent-dense teams to drive frontier research in superintelligence [10] - Zuckerberg has expressed optimism about the potential for developing superintelligence, indicating that it could significantly impact Meta's systems in the coming years [10] - If successful, Meta's advancements in superintelligence could lead to substantial growth beyond its current market cap of nearly $2 trillion, positioning it as a major winner in the AI sector [10]

Geopolitical Implications - The AI race has geopolitical dimensions, not just commercial ones [1] - The country achieving superintelligence first could gain significant military advantages [1]

Is Anthropic a dark horse in the race to superintelligence? Listen to “Money Talks”, with @alice_fulwood, @Birdyword and @EthanYWu https://t.co/TxwEVZPbkX ...

Group 1 - Meta's Metaverse initiative has resulted in significant capital expenditures and research and development costs, amounting to billions, but has not yet produced successful outcomes [1] - Despite the challenges faced with the Metaverse, Meta's stock has increased over 760% from its lows in 2022 [1] Group 2 - The article reflects on the author's extensive experience in the technology, media, and telecommunications (TMT) sector, emphasizing a focus on momentum as a key investment strategy [2]

The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market update newsletter, actionable trades, technical analysis, and a chat room. Learn more Analyst's Disclosure:I/we have a beneficial long position in the shares of META either through stock ownership, options, or other derivatives. I wrote this article myself, and it expres ...

Core Insights - Meta's significant investments in artificial intelligence (AI) are yielding positive results, as evidenced by a substantial increase in stock price following a strong quarterly earnings report [3][10] Financial Performance - For the second quarter, Meta reported earnings of $18.34 billion, or $7.14 per share, marking a 36% increase from $13.47 billion, or $5.16 per share, in the same period last year [6] - Revenue rose 22% to $47.52 billion from $39.07 billion, surpassing analysts' expectations of $44.81 billion [6] - Daily active users across Meta's platforms reached 3.48 billion, reflecting a 6% year-over-year growth [6] AI Investments and Strategy - Meta is heavily investing in AI development, with expectations of increased costs, forecasting expenses to rise to between $114 billion and $118 billion by 2025, a 20% to 24% increase year-over-year [7] - CEO Mark Zuckerberg expressed a vision for "personal superintelligence," aiming to empower individuals rather than centralizing control over AI [9] - Recent investments include $14.3 billion in AI company Scale and securing a 20-year nuclear power deal to support AI and computing demands [9] User Growth and Market Position - Meta's workforce grew to 75,945 employees, a 7% increase from the previous year [10] - Following the earnings report, Meta's shares surged by 11.8%, reaching $777.08 in after-hours trading, positioning the stock for a potential record high [10]