Meta's big AI win isn't its models or chatbots

TL;DR: Meta’s latest earnings show that, for all its sprawling AI ambitions, its core business really is still about selling our attention. One of its clearest wins last quarter was that people couldn’t put Instagram down, boosting ad revenue—which isn’t much to show for a year of record AI spending.

What happened: You’re not alone if your Reels habit recently hit cry-for-help levels. This past quarter, the amount of time people spent on Instagram jumped by double digits year over year, Meta says.

Mark Zuckerberg credited our collectively worsening scrolling habit to an improved AI-powered algorithm. Every public Reel and feed post on Instagram is now being analyzed by LLMs to recommend content better, according to the company—with AI also enabling better targeted ads. (Though all this probably doesn’t help the “Instagram is addictive by design” accusations.)

In other words, the clearest way that AI is making money for Meta is keeping eyeballs on feeds longer, which in turn sells more ads—though the firm’s overall profits still fell about 14% compared to this time last year.

All in on ads: Advertising made up a whopping $59.4 billion of Meta’s $60.8 billion total revenue last quarter. And it’s clearly trying to lean into its biggest moneymaker: The company’s building out an AI-powered, automated one-stop shop for brands to create and serve ads (though the rollout’s been mixed). Meanwhile, its Reality Labs division—where its popular smart glasses and not-so-popular VR headsets are developed—continued to hemorrhage money despite growing revenue, losing $4.6 billion last quarter.

Meta’s AI media blitz: The lack of a bigger AI payoff also helps explain Zuck’s recent “AI optimist” press tour—which included an op-ed in the Wall Street Journal basically subtweeting OpenAI and Anthropic. And while others in the AI industry, including those at major labs, want to “deliberately pace” frontier AI development, Meta’s CEO evidently isn’t a fan of slowing down (perhaps because it could make it harder for Meta to catch up).

Bottom line: Meta positions itself as an AI company building “superintelligence.” But its recent financial results show that the smartest thing its AI currently does might be picking your next Reel. —WK

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