Meta Platforms, the parent company of social media platforms Facebook, Instagram, and WhatsApp, reported better-than-expected profits and revenues for the third quarter of the year. The company’s ongoing austerity drive and a recovery in digital advertising spending ahead of the holiday season helped boost its performance. Additionally, the company trimmed its expenses for the year. However, it has forecasted spending levels for 2024 that will exceed Wall Street estimates. This is due to the fact that the company pushed hiring needs from this year to the next and continues to invest in AI infrastructure. The conflict in Israel and Gaza is also expected to dampen fourth-quarter sales.
Meta’s operating margins for the third quarter were its best in two years, and the company has shed 21,000 employees since autumn 2022, particularly in non-engineering roles. In 2024, Meta plans to prioritize investment in artificial intelligence infrastructure, while de-prioritizing non-AI projects to avoid adding too much headcount.
Meta’s CEO, Mark Zuckerberg, has promised that 2023 will be Meta’s “year of efficiency.” In a conference call with analysts, he emphasized that a lean company culture provides stability for Meta to “see our long-term initiatives through in a very volatile world.” The company is focused on engineering talent as it plans to ramp up hiring again next year.
Meta’s 2024 total expenses are expected to be in the range of $94 billion to $99 billion, higher than previous estimates. The company cited higher AI infrastructure investments, hiring plans, and expected losses on its metaverse-oriented Reality Labs unit as reasons for the increased expenditure.
Meta has been updating its data centers to adopt AI-friendly hardware and software systems. The company expects capital expenditures for 2024 to be in the range of $30 billion to $35 billion, with growth due to investments. Despite the positive news, Meta’s shares flip-flopped in after-hours trading, initially gaining 3% before reversing to trade 3% below the closing price two hours later.